July 29, 2019 / 5:54 AM / 2 months ago

Higher costs negate rising beer sales for Heineken

BRUSSELS (Reuters) - Heineken NV, the world’s second-largest brewer, missed estimates for first-half profit on Monday, as rising input costs offset higher beer sales.

FILE PHOTO: Heineken beers are seen on a production line at the Heineken brewery in Jacarei, Brazil June 12, 2018. REUTERS/Paulo Whitaker/File Photo

The Dutch maker of Heineken, Europe’s top-selling lager, maintained its full-year forecast that operating profit before one-offs would increase by a mid-single-digit percentage.

The company said for the full year it would benefit from increased sales, higher prices and a shift in consumer taste to more expensive beers. However, the company also warned input and logistics costs would rise by a mid-single-digit percentage over the year.

Heineken’s costs in the January to June period rose 8.5%, mainly on packaging materials including aluminium.

For the first half, beer sales volumes rose in all regions, except Europe, where it was hit by poor weather and an unfavourable comparison to last year when the soccer World Cup boosted sales.

Operating profit grew by 0.3% on a like-for-like basis to 1.78 billion euros ($1.98 billion) in the first half, missing analysts’ estimate of 1.92 billion euros, according to IBES data from Refinitiv.

Sales were particularly strong in Vietnam, Heineken’s second most profitable market, rising by a double-digit percentage as it pushes deeper into the country.

Sales in Mexico, the company’s largest market, were up by a low single-digit percentage, and by a high single-digit percentage in Brazil, where Heineken is the second largest brewer.

The company’s shares have risen by a third this year, touching a record high of 104 euros on Friday, similar to gains by Danish peer Carlsberg, but less than those of world’s top brewer Anheuser-Busch InBev, whose shares have rebounded partly due to easing concerns over its debt.

($1 = 0.8988 euros)

Reporting by Philip Blenkinsop; Editing by Shounak Dasgupta

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