E-Malt.com News article: 3210

Netherlands: Heineken NV, the world's third-biggest brewer, said first-half profit fell 27 % after the euro rose against the dollar and beer consumption slowed in Western Europe. Net income declined to 293 million euros ($354 million) from 400 million euros in the first six months of 2003, the Amsterdam- based company said in an e-mailed statement.

The Dutch maker of Amstel lager suffered in Europe, where it makes about two-thirds of its sales, as wet summer weather and slower economic growth led consumers to spend less time and money in bars. Belgian competitor Interbrew SA took control last month of Cia. de Bebidas das Americas, Latin America's largest brewer, in a $11.2 billion combination to make up for declines in Europe.

“Poor weather has been unhelpful, but we think there are some structural issues holding back Europe as well, particularly the poor demographic trends and the rapid growth of discount retailers,'' Alexandra Oldroyd, an analyst at Morgan Stanley in London who has an ``equal-weight'' recommendation on the stock, wrote in a research note Monday.

Heineken was expected to say that profit dropped 26 percent to 294 million euros, according to the median estimate of seven analysts surveyed by Bloomberg News.

Shares of Heineken have risen 2.1 percent this year in Amsterdam, while the Bloomberg Europe Beverages Index has increased 9.3 percent. Interbrew, now known as InBev, is this year's best performer on the index with a gain of 26 percent.

Heineken, which trails Anheuser-Busch Cos. and InBev in size, said in February that profit before one-time items and goodwill amortization would decline in 2004 as a result of the dollar's drop against the euro and other currencies. Profit by that measure fell 4.5 percent to 319 million euros in the first half and the company reiterated its outlook for the year.

Sales for the six months climbed 11 percent, bolstered by gains in Asia and Eastern Europe and acquisitions from last year, such as the purchase of Austria's BBAG. Heineken gets about a third of its earnings from so-called emerging markets, while InBev gets 49 percent from those countries, according to Kempen & Co. NV in Amsterdam. “It's clearly not an easy time,'' Heineken Chairman Anthony Ruys said on a conference call.

With sluggish demand for standard beer in Western Europe and North America, the world's top four brewers have pushed into Asia, South America and Eastern Europe.

Since 2002, Heineken, SABMiller Plc and InBev have made or planned a total of 36 purchases in countries. Anheuser-Busch, the world's No. 1 brewer, agreed earlier this year to buy the 62 percent of China's Harbin Brewery Group Ltd. it doesn't own for $444 million to expand in the world's biggest beer market.

Leuven, Belgium-based InBev is expect to say tomorrow that profit climbed 11 percent to 190 million euros in the first half as it benefited from growth in Russia and China. The earnings will exclude AmBev, the maker of Antartica and Skol beer, which it agreed to buy in March to gain a foothold in six of the world's seven fastest-growing markets.

European brewers face an even tougher time in the second half as earnings will be compared with the last six months of 2003, when record summer temperatures in the region fueled demand for beer, according to a report by Credit Suisse First Boston.


08 September, 2004