Heineken NV (HEIA), the brewer that last week raised its bid for control of Asia Pacific Breweries Ltd. (APB), said today it expects full-year profit to remain unchanged after reporting first-half earnings that missed estimates.
Earnings before interest and taxes, excluding some items, were 1.27 billion euros ($1.58 billion), Amsterdam-based Heineken said today in a statement. That compared with the 1.31 billion-euro average estimate for profit on that basis in a Bloomberg survey of 10 analysts. The figure represents a so- called organic decrease of 5.5 percent, compared with the median estimate of 9 analysts for a 0.5 percent increase.
The shares fell as much as 3 percent. Heineken expects net profit before exceptional items and amortization and excluding acquisitions and currency swings to be “broadly in line” with the the 1.58 billion euros reported last year as production costs accelerate and western European drinkers continue to shun beer. Profit on that basis fell 4 percent in the first six months.
“The full-year guidance looks, quite honestly, pretty optimistic, particularly since western Europe isn’t going to get any better,” Melissa Earlam, an analyst at UBS AG in London, said today.
Volume in western Europe, Heineken’s biggest market, slid 2.9 percent in the period. Brewers including SABMiller (SAB) Plc and Anheuser-Busch InBev NV (ABI) have posted declines in the region as the economic crisis drags on consumer confidence and a wet summer damped demand for ale. Heineken has sought to offset the drop with cost-cutting measures including brewery closures.
Heineken shares dropped as much as 1.32 euros to 43.18 euros in Amsterdam trading, limiting their annual gain to 22 percent. SABMiller stock has advanced 23 percent this year, while AB InBev is up 38 percent.
Western European Drop
Earnings slid 14 percent in the region, Heineken said. It announced a new savings program in February, focused on more efficient global purchasing of commodities and services, to save 500 million euros by 2014. The company had 85 million euros of pretax savings in the first half, it said, led by reductions in Europe.
Costs to produce its beer will rise 8 percent this year from an earlier forecast of 6 percent, after the price of goods to produce its beer increased 6.9 percent in the first half.
Revenue rose 5 percent to 8.78 billion euros. Analysts estimated sales of 8.81 billion euros. On an organic basis, it rose 4.5 percent compared with a 4.4 percent estimate, and consolidated beer volume increased 2.8 percent versus a 3.2 percent estimate.
Heineken is among brewers seeking to secure growth in emerging markets to offset torpid demand and competition in Europe and the U.S. It offered to buy its joint venture partner Fraser & Neave Ltd.’s 40 percent stake in Asia Pacific Breweries for about S$5.6 billion, or S$53 a share, last week to prevent a company connected to a Thai billionaire from disrupting its control. Heineken, which already owns 42 percent of the south- east Asian brewer, had previously offered S$50 a share for the brewer of Tiger beer.
“The business of APB provides direct access to two of the world’s most exciting growth regions for beer –- Southeast Asia and the Pacific Islands, and China,” Chief Executive Officer Jean-Francois van Boxmeer said. “We are working towards a swift completion of the transaction.”
Heineken agreed to buy Temasek Holdings Pte’s 1.4 percent stake in APB yesterday for S$53 a share, according to a person with knowledge of the matter. More than 84.24 percent of APB’s shares are now owned, controlled or agreed to be acquired by Heineken and its concert parties, according to APB.
Organic measures exclude the effects of acquisitions and disposals, as well as currency fluctuations.
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