Netherlands/Belgium: AB InBev and Heineken shock markets with half year results

Heineken has shocked on Monday markets after releasing its half year results. The world’s second biggest brewer reported a 4.6% increase in organic beer volume in the second quarter but had to correct the forecast for the growth of its full-year operating margin from +0.25% to -0.2%. „Operating profit margin was lower than last year mainly due to the consolidation of Brasil Kirin, adverse currency effects and higher input costs,“ said Jean-François van Boxmeer, Heineken’s Chairman of the Executive Board and CEO. „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," the top executive was quoted.

This was contrasted sharply by AB InBev, that published its results for the second quarter 2018 last Thursday. The world’s leading brewer reported only a 0.8% increase in organic beer volume in the second quarter but an increase in the normalized EBITDA margin by 0.85% to 39.7%.

According to Bloomberg AB Inbev is streets ahead of rivals when it comes to margins.  While AB InBev had a 31.3% operating margin in the first half year of 2018, Heineken accounts only for half of it (16.3%) and the world’s number three Carlsberg comes last with 13.3%.

AB InBev, the Belgian-Brazilian beer behemoth is a master of cost control but looks rather weak when it comes to volume growth. This in turn is a key discipline of its Dutch rival Heineken. Still, Heineken needs to show that its impressive sales growth can be translated into a decent progress on profit.

In the end investors did not like either performance and sold the shares of the respective company after the release of the half year results.

 

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