Heineken NV lowered its earnings guidance as consumers bought less beer after the brewer imposed major price increases, especially in markets like Vietnam.
Operating profit slumped 22% on an adjusted basis in the first half, the Amsterdam-based brewer said Monday. For the full year, Heineken forecast stable to mid-single digit operating profit growth.
Brewers are struggling to pass high raw material costs onto consumers without driving consumers away to cheaper brands. Heineken is the first of the big global beermakers to report first-half results, and its comments may portend difficulties for rivals Anheuser-Busch InBev NV and Carlsberg A/S.
Previously Heineken had a forecast of mid- to high-single digit annual operating profit growth. The Dutch brewer forecast cost inflation to ease next year, which will lift pressure to raise prices.
Heineken increased the impairment for its Russian business to 201 million euros ($221 million). The company said it’s still working to sell the unit, and it doesn’t expect any financial gain from the ongoing business or any divestment.
Revenue rose less than expected in the first half and beer volumes dropped more than expected. Last year, the company increased pricing by 14%, the most in at least a decade.
Heineken predicted pricing will moderate and volumes will decline by a low single-digit percentage in the second half. The company is counting on a turnaround in profit during the period.
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