Heineken's revenues increase, but profits are below expectations

Heineken, the second-largest beer maker in the world, has reduced its margin guidance for the year due to the weakness of the currency in some more profitable markets and its expansion in Brazil.

The Heineken brewer lager, Tiger, Sol and Strongbow cider announced that its operating margin would decrease by 20 basis points in 2018, compared with a previous forecast of a 25 basis point increase, after a sharp decline in the first half.

In the first six months of 2018, the brewery sold more beer than expected, with the strongest growth in its two most profitable markets, Vietnam and Mexico, Brazil, Cambodia, the United States. 39, South Africa, Ethiopia and Russia. The turnover rose 5.6% organically, to 10.8 billion euros.

"The turnover is growing strongly in the first half, with organic organic revenue growth in all regions," explains Jean-François van Boxmeer. "Europe returned to growth in the second quarter while the other regions maintained their positive momentum: the Heineken brand grew strongly by 7.5%."

Currency Hit

The Dutch brewer, whose beer Heineken He is the first seller in Europe, said the new orientation was because of the negative negative translation of the currencies concentrated more in his countries higher margin, such as Vietnam, and a greater dilutive effect of its expansion of Brazilian business.

Heineken acquired the loss – making Japan Kirin's Brazilian operations in 2017 to become the country's second-largest South American, and had already warned of an impact on its margins.

"We are increasing the margin but it is not yet at the group average and at the same time we have double-digit growth in volumes and revenues, which we had not expected Said Laurence Debroux, chief financial officer of Reuters.

She added that Heineken now believed that the Brazilian margins "A year ago we did not want to say it because it was still at see, but at this point we think it's possible … We say (in) three In the second half, Heineken expects a 'further growth of our turnover and accelerating the growth of our operating profit on an organic basis, "van Boxmeer added

. invest regularly behind our brands, innovations, e-commerce platforms and business strategy. Over the year as a whole, given the strong acceleration of our operations in Brazil with margins still below the group average and the negative impact of currencies, the operating margin should decrease about 20 bp. "

Off Factors

Trevor Stirling, Beverage Analyst at Bernstein Securities, said there was" a list of factors and exceptional factors "explaining the low earnings in the first semester.

"If you are an optimist, you would say that much of the weakness of the first half comes from exceptional items and that the strong growth in Brazil is positive in the long run, but that you have to do a lot better in the second half to reach the revised forecasts ". He said:

Higher revenue growth was partially offset by higher expenditures and higher input costs, particularly for aluminum, said Heineken

. to 1.75 billion euros, below the average forecast of 1.89 billion euros a poll Reuters.

Operating margin decreased 118 basis points. Excluding Brazil, this would have been a drop of 76 basis points

Earnings per share at 1.89 euros was also lower than the Reuters consensus of € 1.95

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