Heineken has reduced its earnings guidance after selling less beer than originally forecast in the first half of the year.
According to reports, the Dutch brewer saw operating profit drop 22% on an adjusted basis in the first half of 2023 after consumers bought less beer following its imposed major price increases.
Despite the setback, Heineken has reportedly still managed to achieve a higher turnover due to price increases, but the high costs of energy and purchasing have also taken their toll.
Reports reveal that the total income in the first half of 2023 was almost €17.5 billion, more than 6% higher than in the same period last year. This comes as a blow to the brewer which previously revealed an anticipated forecast of mid- to high-single digit annual operating profit growth.
Additionally, from reports via the NL Times, below the line, a profit of €1.2 billion remained, 9% less than the previous year.
Heineken has attributed the situation to the decline in profits in the Asia-Pacific region, largely due to weak demand from Vietnam.
Purchasing and energy costs particularly weighed on profit as well as investments in digitisation and sustainability, according to the beer giant.
For the second half of the year, Heineken has revealed that it expects profits to increase again and anticipates that the costs of purchasing, transport, energy, and water will decrease and beer sales should pick up.
Last year, Heineken increased pricing by 14%, a move that marked the most it had raised them in at least a decade.
According to The Straits Times, the news of Helneken’s struggle comes at a time when brewers are finding it hard to absorb high costs and when passing them on to consumers are recognising that higher prices risk driving business away altogether.
Heineken is the first of the big global beer makers to report first-half results, and its situation may also soon be reflected in the upcoming results of other global brewers such as AB InBev and Carlsberg.
Heineken has reportedly forecast cost inflation to ease next year, which it hopes will lift pressure to raise prices and mark a turnaround in profit.
