Dutch brewer Heineken on Monday lowered its earnings outlook for the full year after price hikes to counter soaring costs battered beer sales, pushing down profits in the first half.
The world’s second-largest brewer had warned the price increases were needed to offset high commodity and energy costs, due in large part to Russia’s ongoing war against Ukraine.
The result was an 8.6 per cent slump in net profit to €1.16 billion (£1bn), as beer volumes fell 5.6 per cent from the same period last year.
Like other major Western companies, Heineken also pledged last year to quit Russia, but drew criticism earlier this year after a Dutch investigative website reported that it was continuing its Russian sales.
The company apologised in March for creating “ambiguity” on its vow to leave the country, saying it was hoping to secure jobs for its Russian employees but struggling to find a buyer for its Russian business.
Heineken said it is still seeking approval for a sale of its Russian operations, and announced a further €113 million write-down of their value, after an €88m hit in December – effectively wiping off the entire value of the business in its books.
Besides the impact of falling Russian sales, the company also said sales in the Asia-Pacific markets were “considerably softer than foreseen, due to an economic slowdown and our own underperformance in Vietnam.”
Social and economic unrest in Nigeria, a major African market, also hit profits, as did “soft” markets in the Americas.
Heineken said it expected inflation to ease in the coming months, which should allow it to moderate the recent beer price increases.
But it warned nonetheless of “short-term challenges given the volatile economic context, with the slowdown of the economy in some countries and unprecedented inflation levels”.
For the full year, it now expects a “stable to a mid-single-digit” operating profit growth on a like-for-like basis, after an 8.8 per cent drop in the first half, to €1.9bn.
Previously management had forecast “mid- to high-single-digit” growth.
