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Heineken has reported that its profits were down for the first half of 2018, the result of what the global brewer describes as “volatile” economic climate and they don’t expect things to calm down any time soon.
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Dutch brewing giant Heineken, home to a family of global brands Newcastle Brown Ale, John Smith’s, Dos Equis, Murphy’s stout, Amstel, Lagunitas and most recently Beavertown, reported a 3% drop in half-year operating profits.
In spite of a consolidated beer volume that grew 4.5%, Heineken’s share price fell 5% Monday after it reported a narrower profit margins than expected.
According to the Drinks Business, Heineken explained that its half-year profit margins were smaller due to its recent acquisition of the Brazilian, a loss-leading arm of Japanese beer brand Kirin, as well as to “adverse currency effects” across its international business.
The Dutch brewing giant said it expects the margin to shrink by 0.2 percentage points by the end of the year, instead of the 0.25 point boost it predicted in February, as “economic conditions are expected to remain volatile.”
Heineken bought Kirin’s Brazilian operation last year for $700m and explained that the “dilutive impact of the consolidation of Kirin Brazil was higher than expected.”
In addition to its Kirin Brazil acquisition, Heineken has made several investments in international breweries over the past year, most recently purchasing a minority stake in London-based Beavertown Brewery. The £40 million investment will reportedly go towards the construction of Beavertown’s new brewing facility which is expected to create as amany as 150 jobs.
Heineken also took the half-year report to announce plans for upgrades at its Star Pubs & Bars division.
Heineken will be investing £6m into its pub chain to enhance to upscale their pub appeal considerably… New outdoor areas will be created at its 120 pubs, adding more opportunities for open-air eating and drinking and dining and better spaces to hold events.
