Dutch brewer Heineken yesterday posted a €95 million loss for the first six months of the year but a cost drive internationally was likely to see some of the savings invested in South Africa.
The company, which owns markets and sells more than 300 brands in 190 countries, took an €847m write-down from the decline in valuation of its stake in China Resources Beer, whose share price has fallen on the Hong Kong stock exchange.
Heineken acquired 40% of the Chinese company in 2018. The Dutch group said in its earnings report the drop in China Resources Beer’s share price was possibly due to “concerns on the macro-economic environment in China and its impact on consumer demand”.
China, the world’s second biggest economy, has encountered severe headwinds in recent years, as a heavily indebted property sector, sluggish consumption and high youth unemployment weigh on confidence.
Heineken shares sank almost 8% on the Amsterdam stock exchange after it published the results.
Despite the loss, Heineken chief executive Dolf van den Brink said the Dutch company “delivered a solid first half of the year”.
Heineken had estimated growth in operating profit between 4%-8% for the rest of the year, but it added it would continue a cost-savings exercise targeting some €500m.
A large proportion of the savings would be invested into marketing and sales in Brazil, India, Mexico and South Africa.
Heineken’s global beer volumes rose by 2.1%, while Heineken brand sales were up 9% in the first six months of the year, the Amsterdam-based brewer said.
Sales topped €17.8 billion, up 2.2%, and were driven by Heineken’s largest operating companies in Nigeria, Mexico, Brazil, Vietnam and India.
Heineken’s operating profit, however, fell by 4.3% to €1.5bn.
The group said volatility remains a reality. Consumer confidence and economic sentiment in developed markets remained below historical average. In the Africa & Middle East region there was a risk of material currency devaluation in Ethiopia and hyperinflation in Nigeria and Egypt.
“We are confident we are able to adapt, yet this continues to bring some short-term uncertainty,” the group said in the results.
In South Africa, Heineken Beverages was formed in 2023 following the merger of Heineken South Africa, Distell and Namibia Breweries. Its local brands include Savanna, Windhoek Beer and Nederburg.
BUSINESS REPORT