Share

Heineken sees Brazil as temporary drag in AB InBev challenge

London - Heineken, the world’s second-largest brewer, wants to challenge leader Anheuser-Busch InBev in one of its key markets - and that’s going to cost the Dutch brewer some lost profit.

The operating profit margin will expand about 25 basis points in 2018, below the target it had for past years, the brewer said on Monday, warning of a headwind as it integrates a business in Brazil that it bought from rival Kirin for 2.2 billion real ($666m). The stock fell 2.8% as of 9:15 in Amsterdam.

The Dutch company became the second-largest brewer last year in South America’s largest economy after Kirin stumbled amid competition with AB InBev. Heineken’s namesake brand had double-digit volume growth in Brazil in 2017, which is improving after a slump caused by a currency devaluation and political upheaval.

The integration is progressing “very well” and the dilutive impact on profit is less than the company first expected, chief financial officer Laurence Debroux said on a call with reporters. Heineken will give a long-term forecast for profit growth next year, she said, as the company moves past an earlier guidance set in 2014 for 40 basis points of annual margin expansion.

Revenue rose 5% on a so-called organic basis in 2017, the company said. Analysts expected 5.7% growth. Volume growth was led by Asia Pacific, where Vietnam is one of Heineken’s largest markets.

Adjusted operating profit of €3.76bn beat the consensus estimate of €3.65bn.

Rising bond yields could weigh on M&A valuations, Debroux also said.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent-ruolie
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders