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Heineken cuts profit outlook after eastern Europe tumble

A plastic container with empty bottles of Heineken beers are pictured among beer kegs outside a restaurant in Singapore August 29, 2012. REU
A plastic container with empty bottles of Heineken beers are pictured among beer kegs outside a restaurant in Singapore August 29, 2012. REU

By Philip Blenkinsop

BRUSSELS (Reuters) - Heineken , the world's third largest brewer, reduced its full-year profit guidance on Wednesday after beer sales in eastern European dropped sharply and slipped in Brazil and in large African markets.

The group, which brews Europe's best-selling Heineken lager, Sol, Tiger and Stongbow cider, said it now expected its net profit before one-offs to fall by a low single-digit percentage this year on a like-for-like basis.

It had previously forecast that net profit would be broadly unchanged from that of 2012. On Wednesday, it added that the stronger euro against a number of developing market currencies would have a negative 40 million euro ($55.09 million) impact.

Heineken said the weakness of the beer market in central and eastern Europe and difficulties in key developing markets, including Brazil, Nigeria, Egypt and the Democratic Republic of Congo had led to lower than expected lager sales.

Consolidated beer volumes slipped 3 percent on a like-for-like basis to 48.3 million hectoliters, lower than the 50.2 million hectoliters average expectation in a Reuters poll of seven banks and brokers.

Consolidated revenue was up just 0.2 percent to 5.18 billion euros, again lower than the 5.41 billion euros forecast in the Reuters poll.

Heineken, the largest seller of beer in Europe, suffered an 8 percent drop in beer sales in central and eastern Europe, with weak consumer spending in Russia, Romania and Greece and wet weather depressing drinking in September.

However, they improved by 1 percent in western Europe, largely due to a hot, dry summer albeit after a wretched spring.

Elsewhere, volumes only rose in the Asia-Pacific region, with increased beer drinking in China, Indonesia, Papua New Guinea and Vietnam more than making up for lower sales in India due to a prolonged monsoon and regulatory changes in the southern state of Tamil Nadu.

Heineken has a greater share of the sluggish western European market that its rivals, but has also boosted its emerging market presence with expansion into Mexico in 2010 and its buy-out of a joint venture partner in Asia last year.

SABMiller , the world number two, last week reported a 4 percent increase in first-half of its financial year, driven by growth in Latin America and Africa.

Global leader Anheuser-Busch InBev reports third quarter earnings next Thursday and world number four Carlsberg gives an update on November 13. ($1 = 0.7260 euros)

(Reporting By Philip Blenkinsop, editing by Robert-Jan Bartunek)

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