Heineken writes down China business by nearly USD 1 billion

The Netherlands | Heineken took a one-time impairment of EUR 874 million (USD 949 million) for the decline in valuation of its stake in China’s largest brewer.

The write-down for the interest in China Resources Beer Holdings was due to concerns about softening consumer demand in the mainland, which had affected its share price, the Dutch brewer said in a statement on 29 July. As a result, Heineken booked a loss of EUR 95 million (USD 103 million) in its first half 2024, ending 30 June.

Heineken had acquired a 40 percent stake in the parent of Hong-Kong listed China Resources Beer for USD 3.1 billion in 2018. The deal gave Heineken a partner with local distribution, while it allowed the Chinese firm to expand into the premium beer segment.

In the first six months of 2024 Heineken grew its net revenue by 2.1 percent to EUR 14.8 billion (USD 16 billion) compared with the same period last year. But its operating profit dropped 4.3 percent to EUR 1.5 billion, mainly due to higher exceptional net expenses, such as brewery closures.

The company said it has a clear path forward with its cost-saving initiatives and is confident that it will achieve its target of some EUR 500 million (USD 542 million) for 2024.

Outlook underwhelms

Investors have been eager for Heineken to update its guidance since it disappointed the market in February, when it set a wide-ranging outlook for profit growth.

Heineken said it now expected to deliver organic operating profit growth of between 4 percent and 8 percent in 2024, compared to its previous guidance of between low and high single-digit growth.

Still, many analysts consider the new EBIT guidance “underwhelming”, as they were expecting more than 8 percent in organic growth.