Heineken’s Lower Profit Sharply Drops Share Prices

Heineken, the second largest beer producer in the world, reported on Monday a lower profit in the first half of the year than expected, prompting it to cut its profit margin estimates for 2018, which caused the share price to drop sharply.

The company, the second largest beer producer in the world after AB InBev, achieved an operating profit before one-off write-offs of $1.75 billion in the first half of this year, which is 1.3 percent higher than the previous year, but below analysts’ estimates, who expected a profit of $1.89 billion.

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Earnings per share amounted to €1.89, which is also lower than the analysts’ consensus of €1.95.

The company’s volume sales, which also owns Karlovačka Pivovara, increased by 4.5 percent year-on-year, exceeding the expected 3.1 percent. Its revenues thus rose by 4.2 percent to €10.7 billion.

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This Danish producer, whose Heineken beer brand is the best-selling in Europe, lowered its earlier estimate of this year’s operating margin by 20 basis points, citing higher-than-expected negative exchange rate differences and a greater-than-expected negative effect from the consolidation of recently acquired operations in Brazil.

Heineken acquired the Brazilian business from Japanese Kirin last year, becoming the second largest player in that market, previously warning that this acquisition could impact its margins.

On European stock exchanges, Heineken’s share price fell by more than five percent this morning following the announcement of its business results.