Congratulations to Heineken, or AB InBev? What would you say?

Heineken NV and Anheuser-Busch InBev NV, two giants of the brewery, clashed last week. The point to remember is that neither one nor the other has the right approach, and life on the opposite sides of the beer mat does not work for any of them.

Heineken announced Monday a 4.6% increase in the volume of organic beer in the second quarter. But the brewer warned that its full-year operating margin would decrease by 0.2 percentage point. Previously, it provided for an increase of 0.25 percentage points

. This is a stark contrast to AB InBev, which announced last Thursday that beer volumes had risen by just 0.9 percent in the second quarter. However, the margin, based on a profit before interest, taxes, depreciation and amortization, increased by 0.85 percentage point to 39.7%.

Heineken attributed the lower margin performance to higher sales in Brazil, where she tries to challenge AB InBev after buying the Brazilian business from Kirin Holding Co. last year. While it sold more beer to Brazil in the first half than expected, its activities there were less profitable than elsewhere, which lowered the overall margin – and it would take three to five years for the margin in Brazil catches up with that of the rest of the group.

The outlook for the next six months should be improved by comparisons with the period of a year ago, when the weather was very bad in Europe, as well as by the absence of any kind. exceptional incidents that hurt. As noted by Bloomberg Intelligence badyst, Duncan Fox, Heineken's focus on high-end brands and the abandonment of Europe to market badets emerging markets is a good sign for the first half of the year.

While these signs are good, the Dutch company still has to show that it can translate its impressive growth in sales into decent progress on profit. After all, its operating margin in the first half was about half that of AB InBev

. As for its Belgian competitor, although he is a master of cost control, his task of relaunching sales growth in the United States seems incredibly difficult. Like other global consumer goods groups, it has to convince more Americans to buy its big brands and cool down their pbadage to local and craft beers.

The market did not like the profits of AB InBev nor that of Heineken. Shares in both fell sharply on their listings

But Heineken outperformed last year. Its shares are trading on a 20.6-fold forward price-to-earnings ratio, just ahead of AB InBev. That seems pretty much right at the moment. The Belgian brewer should be on a considerable premium to his rivals, given his superior profits. But for this promise to materialize, it must be shown that it can increase sales, as well as lower costs and margins. This would require a sustained recovery in the United States

. For all the moss from both breweries, neither of them is installed in the right place.

To contact the author of this story:
Andrea Felsted at [email protected]

To contact the editor responsible for this story:
Jennifer Ryan [19659019] to [email protected]