Heineken in warning over tough market

HEINEKEN shares dived yesterday after its issued a warning that weak consumer sentiment and a damp summer would wipe out profit growth this year.

Its stock was driven down by as much as 16 per cent to a 21-month low at one stage and the bleak statement sent shockwaves across the drinks industry.

The firm revealed weaker-than-expected net profits of €605m (£529m) for the first half of the year.

Underlying operating profits were 11 per cent higher than a year ago, short of market expectations of a 17 per cent rise.

Heineken’s trading conditions remained favourable in Latin America, sub-Saharan Africa and Asia-Pacific, but not in developed markets.

“We have seen a very bad summer,” chief executive Jean-Francois Boxmeer said. “At the same time, we also see in a number of markets, more in Europe and the USA, weak consumer confidence. You see uncertainty reflected in lower on-premise sales.”

The Dutch group has been rolling out its main Heineken-brand globally, helping demand for the beer outperform its other products.

Heineken beer was launched in Mexico in March, where the company controls 40 per cent of the market after buying the brewing business of local firm Femsa last year.

“It’s an implicit profit warning of 13 per cent,” said Trevor Stirling, beverage analyst at Bernstein Research.

“If you were an optimist you could say that tourists will go back to Egypt and summer in Europe would not be as bad next year, but Greece is unlikely to be better, Russia maybe not and barley prices will be a lot higher.”

Heineken is Europe’s largest beer maker. It holds the number two spots in debt-ridden Ireland, Portugal and Spain.