Heineken results lose their fizz

Shares fall as poor weather and 'weak consumer sentiment' pushes Heineken's first-half profit down 17%.

by Elizabeth Anderson
Last Updated: 21 Aug 2013

The world’s third-largest brewer, whose brands include Kronenbourg, Sol and Strongbow, as well as its eponymous lager, said net profit for the six months to the end of June fell 16.6% to €639 million (£546m) from last year’s €766m (£656m).

Amsterdam-based Heineken, which also owns 1,300 pubs in the UK, said bad weather, weak consumer sentiment in Europe and the US, and slowing growth in developing countries had all affected business. The flat results knocked 3.5% off shares in early morning trading. And investors may have little to toast in the second half of the year, as Heineken expects the muted outlook to remain in the coming months.

But it wasn’t all gloom. A new cost reduction programme helped boost the company’s bottom line, achieving €139m (£119m) in savings in the first six months of the year. Overall Heineken’s revenues rose 3% to €10.4 billion, although that was mainly due to the company’s takeover of Asian Pacific Breweries (APB), the maker of Tiger beer. Heineken bought the 58% stake in APB it did not already own for €4.8 billion last November. Without the whole of APB, first half sales would have fallen by 1%, the company said.

Heineken is also making strides in emerging markets, where total operating profits in grew 7% over the year and now make up half of earnings for the group. The takeover of APB, on top of the 2010 purchase of the brewing business of Mexico’s Femsa, has helped boost Heineken’s presence in the all-important emerging markets.

Meanwhile in Germany, major brewers have allegedly been fixing beer prices for 20 years, German magazine Focus reported. The agreements would be struck over the phone or at the sidelines of industry meetings, the magazine claims. If proven, the brewers could face potential fines in the hundreds of millions of euros.

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