Heineken Holding N.V. reports on 2020 first quarter trading

Amsterdam, 22 April 2020 – Heineken Holding N.V. (EURONEXT: HEIO; OTCQX: HKHHY) today publishes its trading update for the first quarter of 2020.KEY HIGHLIGHTSBeer volume -2.1% organically for the quarter.Heineken® volume +5.0% in the quarter.March volume significantly impacted by Covid-19.Heineken Holding N.V. engages in no activities other than its participating interest in Heineken N.V. and the management or supervision of and provision of services to that company.FIRST QUARTER VOLUME BREAKDOWN
^{1  Refer to the Definitions section for an explanation of organic growth and volume metrics.}FIRST QUARTER VOLUME REVIEWWith the spread of the Covid-19 crisis to all geographies, multiple countries have taken far-reaching containment measures such as restrictions of movement for populations and outlet closures, sometimes combined with the mandatory lockdown of production facilities. This is having a significant impact on HEINEKEN’s markets and on its business in 2020 and is already visible in the volume reported for the first quarter. In most cases these measures were implemented in the last weeks of March. By exception, specific reference is made to the volume performance in March to improve transparency.Heineken® brandHeineken® volume grew by 5.0% in the quarter, with a decline of 2.4% in March.Volume grew double digit in Brazil, China, Mexico, the UK, Poland, Mozambique, Ivory Coast and South Korea among other markets. Heineken® 0.0 was introduced in Vietnam in March and is now present in 58 countries.BUSINESS IMPACT AND MITIGATING ACTIONS The initial impact of the Covid-19 crisis is visible in the volume performance of this quarter and is expected to worsen in the second quarter of 2020. The second half of the year is also expected to be impacted, as lockdowns may be lifted but the impact on the economy is likely to remain. HEINEKEN’s results in 2020 will be impacted by lower volumes and other effects, including:A significant risk of negative transactional and translational currency impacts due to the devaluation of emerging markets currencies versus the US dollar and the Euro.The increased risks on credit losses from customers, business continuity of small suppliers, impairments and non-effective hedge contracts.Since the beginning, crisis management teams have been in place at a global, regional and local level, to ensure a coordinated response in regards to the health & safety of HEINEKEN’s employees, business continuity and the implementation of mitigating actions.All discretionary expenses are being reduced. In particular, international travel, corporate events and hiring for all positions have been suspended. All non-committed CAPEX has also been suspended, unless absolutely necessary for the immediate business continuity or safety. Projects and technology upgrade programmes are being temporarily paused or scaled down and will be revaluated. Furthermore, bonuses for 2020 will be cancelled for Senior Managers, including the Executive Board and the Executive Team. Operating companies are reducing and reallocating marketing expenses and continuously assessing effectiveness under the current environment. Consumer communication is being adapted to support activities that help on-trade customers and reflect social distancing. Teams are quickly reacting to business changes. Service levels to modern retailers have increased, focusing on key SKUs and shelf replenishment, including outside-store hours service and direct store delivery. Business-to-consumer initiatives are accelerated to capture the growth of e-commerce channels.The lack of visibility on the end date of the Covid-19 pandemic and the duration of its impact on the economy has led HEINEKEN to withdraw all guidance for 2020.FINANCING UPDATEHEINEKEN entered the crisis with a strong balance sheet and an undrawn committed revolving credit facility of €3.5 billion maturing in 2024. There are no financial covenants in the outstanding debt. In recent weeks, HEINEKEN has successfully secured additional financing by issuing new bonds. On 18 March 2020, Heineken N.V. placed CHF 100 million of 5-year Notes with a coupon of 0.6375% privately.On 25 March 2020, HEINEKEN placed €600 million of 5-year Notes with a coupon of 1.625% and €800 million of 10-year Notes with a coupon of 2.25%. The notes were issued under the Company’s Euro Medium Term Note Programme and are listed on the Luxembourg Stock Exchange. The proceeds from the Notes issuance will be used for general corporate purposes. The maturity dates of the Notes are 30 March 2025 and 30 March 2030.HEINEKEN is well prepared to meet its financial commitments, including the €1 billion bond maturing on 4 August 2020 and the final dividend for 2019  corresponding to €1.04 per share on 7 May 2020, subject to the approval of the Annual General Meeting on 23 April 2020.HEINEKEN will deviate from its dividend policy and will not pay an interim dividend following its half year results in August 2020. REPORTED NET PROFIT OF HEINEKEN N.V.Reported net profit of Heineken N.V. for the first three months of 2020 was €94 million (2019: €299 million), impacted by the volume drop in March due to Covid-19 and limited benefit from the mitigation actions.TRANSLATIONAL CURRENCY UPDATEHEINEKEN regularly provides an update of translational currency impacts using its latest estimates available on operating profit (beia) and net profit (beia) for the full year in local currencies and the spot rates close to the date of the publication. Since the latest update on 12 February 2020 many currencies have devaluated significantly versus the Euro, especially the Mexican Peso, Brazilian Real and Indonesian Rupiah. However, given the uncertainty in profit estimations for this year it is not possible to provide a reliable estimate of the translational currency impact.DEFINITIONSBrand specific volume (Heineken® Volume)
Brand volume produced and sold by consolidated companies plus 100% of brand volume sold under licence agreements by joint ventures, associates and third parties.