Half-year earnings down at brewer

HEINEKEN, THE world’s third-largest brewer, saw its earnings fall in the first six months of the year, as it was hit by higher input costs and weak European sales. The results underline the importance of the Dutch brewer’s struggle to keep control of its southeast Asian distributor, Asia Pacific Breweries (APB), out of the hands of a rival Thai group.

Earnings before interest and taxes (EBIT) rose 4.3 per cent from a year earlier to € 1.16 billion, but only on the strength of acquisitions and currency effects. When these were excluded, earnings fell by 0.5 per cent, while revenues rose 5 per cent to € 8.78 billion. Earnings and revenues missed analysts’ consensus expectations. Net profits jumped 30 per cent to €783 million, largely due to profit from the sale of a subsidiary.Operating earnings fell in western and eastern Europe, but grew in other regions including Asia.

Jean-François van Boxmeer, the chief executive of Heineken, said in a note that net profits for the full year would be “broadly in line with last year, on an organic basis”. Analysts had expected profits to grow by about 1 per cent.

Heineken has spent the past month battling an effort by Thai Beverage to gain substantial control over APB, a joint venture run by Heineken and the Singaporean conglomerate Fraser and Neave (FN). APB brews the Tiger brand and distributes Heineken’s brands in crucial southeast Asian markets such as Vietnam. On Friday FN’s managing board recommended shareholders accept Heineken’s bid to acquire its stake in APB for S$53 (€34.1) per share. Mr van Boxmeer welcomed that move, saying Heineken was “working towards a swift completion of the transaction”.

But the acquisition is far from certain, as ThaiBev owns a 26.4 per cent stake in FN and will probably try to block the deal.

Heineken does not reveal how its Irish operation, which employs about 550 people in Cork where it brews Murphy’s Irish Stout and Beamish, is performing at the interim stage. In the year to December 31st 2011, however, Heineken Ireland increased revenues to € 464 million.