By Geoffrey Smith
Investing.com — Another day, another set of updates that show how uneven the recovery from the pandemic is likely to be.
Heineken (AS:) shares fell as much as 10% on Wednesday in response to preliminary data that confirmed investors fears – and then some – about the impact of Covid-19 on its business.
First-half net revenue fell by 16.4% on an organic basis. Sales volumes fell 11.5% and average selling prices fell 3.6%, as the Dutch brewing giant suffered from the closure of bars and restaurants around the world. Heineken’s reliance on this channel for sales, which generates the highest margins in the brewing business, meant it was also harder hit than most.
The company also reported 550 million euros of impairments which took it to a reported net loss of 300 million euros. Underlying net profit fell 76%.
The group said it “remains confident in its ability to navigate the crisis while continuing to build a bright future,” but its release was nonetheless conspicuously lacking in upbeat details about the pace of recovery. Understandably so, given the closure of bars and restaurants across the south and west of the U.S., the reimposition of a ban on alcohol sales in South Africa and – as of this week – the closure of the Magaluf party strip in Mallorca due to the inability of Europe’s tourists to observe social distancing.
All sobering stuff, even if Heineken stock did subsequently recover to be down only 2.9% on the day.
The resurgence of animal spirits has been a problem for the authorities wherever lockdowns have been eased, from Tokyo to Texas. However, the gambling sector appears to be one where activity has rebounded best with relatively little added risk.
Well-developed online channels have allowed punters to indulge their vice from the comfort and safety of their sofas as most of Europe’s most lucrative soccer leagues and horse racing events have resumed.
GVC, the owner of bwin and Ladbrokes (LON:), said that activity in sports betting has been close to pre-Covid levels since the resumption of sports events, although nothing could hide the effects of a quarter in which its betting shops were closed for all but the last two weeks. Net gaming revenue was down 22%.
GVC (LON:) shares fell 5.0%, although this was as much due to the separate announcement that respected Chief Executive Kenneth Alexander is to retire as of this week, to be succeeded by Shay Segev, who is currently chief operating officer.
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