The rainy conditions during the Euros football championship made for disappointing sales at a time when beer and general alcohol sales would be expected to show a rise.
ADVERTISEMENTBeer volumes at Dutch brewing company Heineken inched up 2.1% in the first half of the year, below the 3.4% expected by the market. The company also reported a revenue of €17,823m for the first half of 2024, representing a 2.2% rise on the same time last year. Operating profits rose 12.5% to €1,542m but below analysts' forecast of 13.2%. The company saw a diluted earnings per share of €2.15, a growth of 5.9%.
The company has taken a hit of €874m on its investment in China Resources Beer, the country's largest brewery, as the latter's share price dropped because of falling demand.
Heineken, which owns brands such as Birra Moretti, Amstrel and Red Stripe, currently has a 40% stake in China Resources Beer.
The charge also contributed to Heineken's net loss of €95m in the first half of the year, down from a profit of €1.1bn in the same period last year.
Heineken is still facing the effects of its steep price hike last year, which saw the price of packaged and draught products climb 15.8% on average. The company said the rise was due to soaring energy and input prices. The uncertain macroeconomic outlook in some of its most important markets also impacted the company's sales and volumes.
The price hike seems to have had an effect on consumers, who are already facing their own mounting financial problems as services, mortgages and the cost of living continues to rise.
Heineken's shares take 7.7% fall
Heineken's chairman and CEO Dolf van den Brink said in a statement on the results: "We delivered a solid first half of the year, organically growing net revenue (before exceptional items and amortisation (beia)) 6% and operating profit (beia) 12.5%. The Americas region stood out, as portfolio mix and major ongoing saving initiatives resulted in a strong operating profit improvement, notably in Brazil and Mexico.
"APAC returned to growth, led by India and with the Vietnamese beer market stabilising. We are actively navigating volatility in Africa. In Europe, we gained market share in the majority of our markets and beer volume was slightly up compared to last year despite poor weather in June. In the second half of the year, we will materially step-up investment in market and sales expenditures with notable increases in key markets."
Heineken warns about continuing geopolitical volatility
In its earnings report for the first half of the year, Heineken said: "Volatility remains a reality. Consumer confidence and economic sentiment in developed markets remain below their historical average.
"In the Africa and Middle East region, there is a risk of material currency devaluation in Ethiopia and hyperinflation in Nigeria and Egypt. We are confident we are able to adapt, yet this continues to bring some short-term uncertainty."
The company updated its operating profit outlook for the full year 2024 to somewhere between 4% and 8%, with the company saying it remains optimistic about its growth and investment prospects, and satisfied with the steps it has taken so far to future-proof the business.
The company also revealed it will be investing heavily in markets such as Brazil, Mexico, Vietnam, South Africa and India in the coming few months.
