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Heineken has lowered profit forecasts for the year after a weaker-than-expected first-half performance as higher prices put off drinkers.
Beer volumes at the Dutch brewing giant fell 5.6% in the first six months of 2023 as price rises helped the group to a 6.3% growth in revenues €17.4bn (£14.9bn).
The “cumulative effect of pricing actions” and a challenging economic backdrop led to a 7.6% organic volume decline in the second quarter.
Heineken also blamed the disappointing results on softer demand in Asia due to an economic slowdown and underperformance in Vietnam, one of the brewer’s biggest markets.
Operating profits in the half sank 22.2% to €1.6bn (£1.4bn), while net profits fell 8.6% to €1.2bn (£1bn).
As a result, Heineken downgraded operating profit expectations from mid- to high- single-digit percentage growth to between zero and mid single-digit.
CEO Dolf van den Brink said: “We prioritised and delivered the front-loaded pricing required to offset unprecedented input and energy cost inflation.
“In Europe, the region with the highest inflationary impact, volume declined in line with our expectations, yet demand in APAC was considerably softer than foreseen, due to an economic slowdown and our own underperformance in Vietnam.”
He added that the premium portfolio, led by the Heineken brand, continued its growth momentum outside Russia and Vietnam.
“In the second half, we expect pricing to moderate with volume trends gradually improving to a low-single-digit decline,” van den Brink said. “On productivity, we expect a significant acceleration relative to the €200m in gross savings of the first half.
“Overall, we expect a strong turnaround in operating profit (beia) growth in the second half and for the full year expect stable to a mid-single-digit operating profit (beia) organic growth.”
Shares plunged 5.7% to €91.38 this morning as markets digested the profits downgrade.
Morning update
It’s a quiet start to the week on markets elsewhere, with the FTSE 100 opening down 0.2% to 7,682.66pts.
Early fmcg risers include Naked Wines, up 4.5% to 76p, Pets at Home, up 2% to 397.8p, and Greencore, up 1.8% to 89.5p.
Kerry Group is down 3.4% to €88.88 and Ocado is 2.1% lower at 956.2p.
This week in the City
It’s looking busier tomorrow as Guinness and Johnnie Walker owner Diageo publishes full-year results and Greggs files interims, with the latest shop price index from the British Retail Consortium also due out.
GSK spin-off Haleon issues first-half results on Wednesday, alongside interims from packaging firm Smurfit Kappa.
High street bellwether Next issues a Q2 update on Thursday, while Coca-Cola Europacific Partners reports interims, AB InBev announces quarterly results, Pets at Home puts out Q1 numbers and Kellogg’s releases second-quarter results in the US, with Amazon also reporting later in the evening.
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