Financial Performance

Heineken Lowers Guidance on Americas Sales Dip

“There was a sharp decline in the United States, where [Heineken's] Mexican lager Tecate slid further."
Matthew HellerOctober 23, 2019
Heineken Lowers Guidance on Americas Sales Dip

Heineken shares fell on Wednesday after the world’s second-largest brewer lowered its profit guidance, reflecting an unexpected sales decline in the Americas.

Heineken said operating profit before one-offs would rise by about 4% on a like-for-like basis in 2019, at the bottom of its previous forecast of mid-single-digit percentage growth.

“Market expectations had shifted to the bottom of that range after operating profit barely grew in the first half of the year,” Reuters noted.

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In trading Wednesday, the company’s shares fell 3% to $52.17 as it also announced first-half results that were softer than expected and that the “increased volatility” across a number of its markets would continue for the rest of the year.

Operating profit rose 0.3% to 1.78 billion euros — below expectations — while beer sales were mixed, with a stand-out performance in Asia, better than expected sales in Europe, only weak growth in Africa, and the unexpected decline in the Americas.

Overall, consolidated beer volumes rose by 2.3% year-on-year in the third quarter, exactly in line with expectations in a company-compiled poll, but sales in the Americas fell 0.5%.

“There was a sharp decline in the United States, where its Mexican lager Tecate slid further,” Reuters said.

In Brazil, where Heineken became the second largest player in 2017 by buying the loss-making operations there of Japan’s Kirin, the company said sales of cheaper beers had declined after a price rise, while volumes of higher-priced beers such as Heineken, Amstel and Devassa grew by a double-digit percentage.

In Mexico, Heineken’s largest market, sales were up by a low single-digit percentage, helped by the launch of low calorie Amstel Ultra. However, Reuters said, the company is now facing competition from AB InBev in the nationwide OXXO supermarkets where its brands were previously the only beers on sale.

“Surging sales in Asia provide some hope, particularly as Heineken has now fully transferred its operations to China Resources Beer as part of a capital and operational tie-up,” Barron’s said.

Alex Tai/SOPA Images/LightRocket via Getty Images

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