Heineken posts loss as China shares write-down

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Dutch brewer Heineken on Monday reported a loss of 95 million euros ($102 million) for the first six months of the year, a result of a decline in its investment in China’s largest brewer.

The company recorded an impairment charge of EUR 847 million due to the decline in the valuation of its stake in China Resources Beer, whose share price fell on the Hong Kong stock exchange.

Heineken acquired a 40 percent stake in the Chinese company in 2018.

The Dutch group said in its earnings report that the decline in CR Beer’s share price may have been due to “concerns regarding the macroeconomic environment in China and its impact on consumer demand.”

China, the world’s second-largest economy, has faced serious headwinds in recent years as a heavily indebted real estate sector, weak consumption and high youth unemployment undermine confidence.

Heineken shares fell almost eight percent on the Amsterdam Stock Exchange in morning trading after the results were released.

Despite the loss, Heineken CEO Dolf van den Brink said the Dutch company had “achieved a solid first half of the year.”

Global beer sales volume rose 2.1 percent, the Amsterdam-based brewer said, while Heineken brand sales rose nine percent in the first half.

Sales exceeded EUR 17.8 billion, up 2.2 percent, with the largest increases achieved by Heineken’s largest operating companies in Nigeria, Mexico, Brazil, Vietnam and India.

However, Heineken’s operating profit fell by 4.3 percent to 1.5 billion euros.

Heineken estimates that operating profit will rise by four to eight percent by the end of the year, but said it will continue cost-cutting measures aimed at raising about 500 million euros.

Heineken said a significant portion of the savings will be invested in marketing and sales, particularly in Brazil, India, Mexico and South Africa.

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