For Heineken Europe’s crisis is not over

On 23 October 2013 Dutch brewer Heineken posted a lower-than-expected profit outlook for 2013 after earnings fell by 15 percent year-on-year for the third quarter 2013. Heineken now expects 2013 net profit to decline in the low single digits.

The warning came as Heineken reported net profits of EUR 483 million in the third quarter, down from EUR 568 million (USD 664 million) year-on-year.

Before revising its forecast, Heineken was hoping that 2013 net profit would be “broadly in line” with last year's EUR 2.9 billion.

Although the company did not issue a year-end profit figure, Heineken warned that the recent strength of the euro against key developing market currencies would further slash gains by around EUR 40 million. CEO Jean-Francois van Boxmeer said that the company will respond by cutting more costs.

Heineken said the weakness of the beer market in central and eastern Europe and difficulties in key emerging markets, including Brazil, Nigeria, Egypt and the Democratic Republic of Congo, led to lower than expected lager sales.

The company said that consolidated beer volumes declined 3 percent to 48.3 million hl in the third quarter compared to the same quarter last year. Consolidated revenue was up just 0.2 percent to EUR 5.18 billion.

Heineken posted an 8 percent drop in beer sales in central and eastern Europe, with weak consumer spending in Russia, Romania and Greece and rainy weather depressing beer consumption in September.

Inflation and unemployment have hit Nigeria while volumes fell in Egypt and Congo due to unrest. In Brazil, slowed growth and inflation have made consumers reluctant to spend. However, volumes improved 1 percent in western Europe, largely due to a brief but hot summer which came after a miserable spring.

Volumes only rose in the Asia-Pacific region, although here the picture is varied too. Beer sales were up in China, Indonesia, Papua New Guinea and Vietnam, while sales in India dropped because of a prolonged monsoon season and regulatory changes in the southern state of Tamil Nadu.