Heineken slips on Chinese beer devaluation

Heineken failed to meet analysts' expectations for operating profit (+12.5% versus an expected +13.2%) in the first half of the year and was forced to take a heavy write-down for its Chinese subsidiary, which led to a loss; despite this, however, it raised its profit growth target for the end of the year. Heineken ended the first half of the year with revenues increasing by 2.2% to EUR 17.82 billion. Net sales were EUR 14.8 billion, an organic increase of 6%, mainly due to growth in Nigeria, Mexico, Brazil, Vietnam and India. Due to depreciation, the net loss was EUR 95 million.

Heineken posted an EUR 874 million writedown as the valuation of its stake in China's largest brewer fell as consumer spending in that key market and in the US came under pressure. At the opening of trading on the Amsterdam Stock Exchange, the brewer's shares lost more than 7%.

Heineken acquired a 40% stake in the Hong Kong-listed parent company of China Resources Beer, for $3.1 billion in 2018. The deal gave Heineken a partner with local distribution reach to navigate the world's largest beer market. In turn, it allowed the Chinese company to expand into the premium beer segment.

At the time of the investment, China's consumer market was still growing, but spending struggled to recover after the pandemic blockades and the real estate crisis. The crisis put a strain on European companies in a number of sectors.

However, the world's second-largest brewer, whose brands include Tiger and Sol, said that a solid performance across its business during the first half of the year, as well as plans to increase investment, gave it the confidence to raise its profit forecast for the full year.