00:00We're joined this morning now by Dolph van der Brink, who is the CEO of Heineken.
00:04Dolph, good morning. As I say, I want to come on and talk about the earnings in just a second.
00:08But first of all, the big story this morning is that we have a trade deal between the United States and Europe.
00:15Now, you generally produce locally and beer is generally consumed locally.
00:19But nevertheless, as the CEO of one of Europe's biggest companies, what are your thoughts on this matter?
00:26Do you welcome this deal? Is this a good thing?
00:30Good morning and thanks for having me.
00:36Congratulations on the big win of the English team.
00:38There was a Dutch coach, so we take a little bit of pride in that win, too.
00:43On the trade deal, I think what's important is that there is a deal, that there is clarity, that further escalation has been avoided.
00:54It is a new reality that the European companies and economies will have to adapt to.
01:01For us as a company, indeed, as you say, the impact is relatively limited.
01:06This is broadly in line with our assumptions as of the beginning of the year.
01:10And very importantly, beer is mostly local for local industry, where we have local breweries producing for local consumers.
01:18So, as such, the impact is as expected in line with our outlook.
01:23OK, let's move on and talk about that outlook and what you've seen over the first half and during the last quarter.
01:31Clearly, there has been an impact as a result of the negotiations that have been taking place with European retailers over price.
01:39Now, you can see that showing up in the numbers, which look a little light when it comes to the beer volume.
01:43Is that now behind us? Has that now been resolved? And is there any way of recapturing any of that?
01:53Well, first of all, I would like to emphasize that we're actually quite proud of our solid profit growth in the first half, up 7.4 percent,
02:02which really shows the strength of our global footprint with very strong performance in the APEC region, in the Africa region.
02:10Indeed, fully compensating for some of the impact that we saw in the first half in Europe.
02:17We're very happy to see volumes globally, broadly stable in the second quarter, up in three out of four regions.
02:26But in Europe, indeed, still impacted by those longer than anticipated customer negotiations.
02:31But very glad that those have now all been concluded.
02:36And therefore, we expect improved volumes in Europe in the second half of the year.
02:43Dolph, it's Creedy in London. Talk to us about that consumer spending story when it comes to the United States specifically.
02:48You just outlined the impact when it comes to Europe.
02:51When it comes to the U.S., you're also seeing weakness when it comes specifically to your Hispanic consumer base.
02:56How are you planning on addressing that?
02:57Yeah, and we do see the U.S. market, beer market, very soft this year.
03:07There's a lot of uncertainty for consumers, Hispanic consumers, indeed, highly commented on, impacted.
03:14We also see that in our volumes.
03:16The U.S. market is a relative small market for us at Heineken.
03:20We are more of a niche player in premium beer, Latin America, Mexico, Brazil, for us, much more relevant.
03:28And we did start seeing some impact, softening of consumer sentiment in those markets as a consequence of what was happening in the U.S.
03:36Do you feel that changing, though, Dolph?
03:39Do you feel like that maybe with a potential turnaround or potential stability in this trade story, potential stability in consumer sentiment,
03:47even a potential turnaround in the dollar, that that might affect what you're seeing in those consumer numbers?
03:53I think there's a lot of uncertainty, a lot of unpredictability.
04:03Consumers will adapt, you know, in time.
04:07And as such, we are deliberately a bit cautious in the short term, also in our outlook.
04:12But mid-long term, we remain optimistic.
04:14And we do believe in our global footprint.
04:18That's one of the strengths of Heineken.
04:21The Asian consumer actually very strong.
04:24We saw very strong growth in key markets, first like India and Vietnam.
04:29We saw solid performance in Africa.
04:31And even in the second quarter, we still had positive volume growth in key markets like Mexico and Brazil.
04:39Hi, Dolph.
04:40It's Valerie, also in London.
04:42I want to ask a question on U.S. manufacturing.
04:45Is there any pressure on your company to move manufacturing to the U.S. under this threat of tariffs?
04:57Again, the tariffs have landed now broadly in line with the scenario, as we have assumed since the beginning of the year.
05:04This is something that we can absorb and will absorb and is explicitly implied to our profit outlook for the rest of the year.
05:13Beer is a very capital-intensive business.
05:15When you build a brewery, it's going to be there for decades.
05:18So, any decision to move manufacturing would be a big decision with long-term ramifications.
05:25And for us, predictability, consistency and outlook is very important as such.
05:31And therefore, we will follow closely the developments as of now.
05:35But for now, in particular, for our setup this year and our outlook, this is broadly in line with what we have assumed since the beginning of the year.
05:45And then other European companies have talked about the headwind of a stronger euro.
05:49What does that mean for their bottom line?
05:52How has FX played into your results today?
05:58Yeah, I think you see it show up in two ways.
06:01In the transactional FX that hits your organic profit and more the translational FX affecting your reported numbers.
06:09Clearly, you see the impact as a euro-denominated company with a global footprint.
06:14The weakening of the dollar has had an impact on our reported numbers.
06:19The transactional impact is something that we've been able to manage, as you see in our organic results, which were very strong at up plus 7.4 percent.
06:32Dolph, just sum this all up for me.
06:36What is your sense of where the consumer is right now?
06:38Are you starting to see a consumer that is slowing down?
06:41Is there any indication of trade down in terms of what people are drinking?
06:45What is your sense of the overall health of the consumer globally?
06:49Because we're all watching this.
06:51We're all on tenterhooks.
06:51Stock markets are at record highs.
06:53Economies look like they're still in OK shape.
06:55We're watching the labour market very carefully.
06:57You have a minute-by-minute read on what people are doing.
07:01So what is your sense?
07:02Are you seeing any slowdown?
07:04Are you getting any hints that the consumer is weakening?
07:06Yeah, I think it's very important to not generalize, Guy.
07:14And so in our global footprint, we see big differences.
07:17As I said before, key markets in Asia are very strong.
07:22India, Vietnam, as mentioned.
07:24We see African markets pretty resilient.
07:26We see a big return to growth in a key market like Ethiopia.
07:30We saw improved performance in a key market like South Africa.
07:33We still saw positive volume growth in key markets like Mexico, Brazil.
07:39U.S. consumer very weak and soft for us, as commented earlier.
07:45And in Europe, it was a bit hard to see through because it was disrupted by those customer negotiations.
07:52We'll have a much more clean look in the second half of the year.
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