Heineken, Carlsberg Forecast Profit Gains as Asia Sales Rise

Updated on
  • Vietnam, southeast Asia growth offsetting weak China, Russia
  • Carlsberg's new CEO to unveil new strategy next month

Heineken Meets Profits Estimates

Heineken NVand Carlsberg A/S, the world’s third- and fourth-largest brewers, forecast higher profit this year as rising consumption in Vietnam and southeast Asia offsets weaker demand from Russia and Africa.

Sales and profit will both increase in 2016 even with an “increasingly challenging external environment,” Amsterdam-based Heineken said in a statement Wednesday. Carlsberg forecast operating profit will rise by a low single-digit percentage on an organic basis as the Copenhagen-based maker of Tuborg beer reported fourth-quarter earnings that beat analysts’ estimates.

The reports provide a boost for an industry struggling to contend with slowdowns in oil-producing countries such as Russia and Nigeria, along with a weakening Chinese economy. Brewers are looking to other Asian markets such as Vietnam -- Heineken’s third-largest -- to pick up the slack.

“Vietnam is a market that Heineken points out as growing, I would expect the same thing for Carlsberg,” Javier Gonzalez Lastra, an analyst at Berenberg, said by phone.

Carlsberg shares gained as much as 4.9 percent in Copenhagen. Heineken rose as much as 1.1 percent in Amsterdam.

Heineken and Carlsberg have divided Vietnam between themselves, drawing revenue from the north and south, respectively. The south of the country is urbanising slower than the north and encountered flooding in the fourth quarter that dented Carlsberg’s sales.

“The outlook is good” for Carlsberg in Vietnam and other parts of Asia such as India, Chief Executive Officer Cees ’t Hart said in an interview. In India, the Danish company’s 42 percent volume growth last year could be sustained in 2016, he said.

Heineken and Carlsberg are under pressure to cut costs ahead of the creation of a more profitable rival as a result of Anheuser-Busch InBev’s buyout of SABMiller. Eastern Europe, where tensions in Ukraine and the ruble’s decline have dented consumer confidence, has weighed on both companies’ profits.

“Russia is not looking good,” Jean-Francois van Boxmeer, Heineken’s chief executive officer, said in an interview. “There is slight pressure in Africa and the Middle East.”

Russia is a bigger problem for Carlsberg, where the company is the largest beermaker through its ownership of Baltika Breweries. Carlsberg is cutting jobs and closing breweries after years of declining profit tied to Russia’s shrinking beer market. The company said it will unveil its new strategy for growth to investors on March 16.

* Heineken profit before some items rose 16 percent to 2.05 billion euros ($2.32 billion) in 2015, the company said, matching the average estimate compiled by Bloomberg
* Carlsberg earnings before interest, taxes and one-time items fell 21 percent to 1.41 billion kroner ($210 million), beating the average estimate compiled by Bloomberg

(Updates with analyst comment in fourth paragraph.)
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