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Heineken cuts full-year margin growth expectations

30 July 2018 by
Heineken cuts full-year margin growth expectations

Heineken has cut its full-year margin expectations due to negative translational hit from currencies and the dilutive effect of its growing business in Brazil.

In a trading update published today, Heineken said it expects full-year margins to decline by 20 basis points, compared with a previous forecast of a 25 basis point increase.

Net revenue saw organic growth of 5.6% to €10.8b (£9.6b), but the company said this was offset partly by increased expenses and input costs resulting in operating profits rising by 1.3% to €1.076b (£1.56b).

Jean-François van Boxmeer, chairman of the executive board and CEO, commented: "Top line came in strong in the first half, with organic net revenue growth across all regions. Europe was back to growth in the second quarter whilst the other regions maintained their positive momentum. The Heineken brand grew strongly by 7.5%. Operating profit margin was lower than last year mainly due to the consolidation of Brasil Kirin, adverse currency effects and higher input costs.

"In the second half, we expect a continuation of our revenue growth and an acceleration of our operating profit growth on an organic basis. We continue to invest steadily behind our brands, innovations, e-commerce platforms and commercial strategy. For the full year, given the marked acceleration of our business in Brazil with margins still below group average and the negative impact from currencies, we now expect the operating profit margin to decrease by approximately 20 bps."

Heineken has predicted that economic conditions will remain volatile.

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