Brewer Heineken curbs profit hopes as Americas slip

Dutch company forecasts operating profit will be at lower end of its previous guidance


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 per cent on a like-for-like basis in 2019. It had previously forecast mid-single-digit percentage growth. However, after a mere 0.3 per cent increase in the first half of the year, due in part to higher packaging costs, market expectations had already shifted down to around 4 per cent.

Heineken shares were down 1.9 per cent at €94.86 shortly after the market open, although they were still up 23 per cent in the year to date. Consolidated beer volumes rose by 2.3 per cent 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. The Asia-Pacific region was the clear outperformer, with a 13.9 per cent 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 per cent.

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 per cent, against expectations of a decline. Growth in Africa, the Middle East and Eastern Europe was also 1.6 per cent, but below expectations. -Reuters