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Brewer Heineken Curbs Profit Hopes As Americas Slip

Published on Oct 23 2019 9:45 AM in Drinks tagged: Featured Post / Heineken / Sol / Tiger

Brewer Heineken Curbs Profit Hopes As Americas Slip

Heineken, the world's second-largest brewer, forecast operating profit this year would be at the lower end of its previous guidance after an unexpected dip in third-quarter sales in the Americas partly offset strong growth in Asia.

The Dutch maker of Heineken, Europe's top-selling lager, as well as Tiger, Sol and Strongbow cider, said on Wednesday that operating profit before one-offs would rise by about 4% on a like-for-like basis in 2019.

It had previously forecast mid-single-digit percentage growth.

However, after a mere 0.3% increase in the first half of the year, due in part to higher packaging costs, market expectations had already shifted down to around 4%.

Heineken shares were down 1.9% at €94.86 shortly after the market open, although they were still up 23% in the year to date.

Consolidated beer volumes rose by 2.3% year-on-year to 64.2 million hectolitres in the July-September period.

The figure was in line with expectations in a company-compiled poll.

'Outperformer'

The Asia-Pacific region was the clear outperformer, with a 13.9% increase. Vietnam, Heineken's second most profitable market, registered a double-digit percentage rise as the company pushes deeper into the country.

By contrast, beer sales in the Americas unexpectedly fell, by 0.5%. There was a sharp decline in the United States and a slight decline in Brazil, where Heineken became the second largest player in 2017 by buying the loss-making operations there of Japan's Kirin.

Heineken said sales of cheaper beers there had declined after a price rise, while volumes of higher-priced beers such as Heineken, Amstel and Devassa grew by a double-digit percentage.

In Mexico, the company's largest market, sales were up by a low single-digit percentage, helped by the launch of low calorie Amstel Ultra.

Heineken's beer sales in Europe, where it is the market leader, grew by 1.6%, against expectations of a decline. Growth in Africa, the Middle East and Eastern Europe was also 1.6%, but below expectations.

News by Reuters, edited by Donna Ahern Checkout. Click subscribe to sign up for the Checkout print edition.

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