Heineken (OTC:HEINY) stock dipped early Monday as the world’s second-largest brewer warned of inflation headwinds in the next 18 months.
“While consumer demand was resilient in the first half, mounting pressure on consumer purchasing power could affect beer consumption,” Heineken said in its second quarter earnings report.
The Dutch brewer expects “strong inflationary pressures on our cost base” and high investment demands to harm its results this year and next. It cited record high natural gas prices, which it uses extensively for industrial processes.
The company said it still expects a minor improvement in operating profits this year. Next year, it plans to increase operational profit by a “mid to high single-digit” percentage. It stated that the operating margin would improve.
Heineken stock, which has risen 15% since Russia invaded Ukraine, fell 2% at the open but recovered to trade down only 0.5% by 3:55 AM ET (7:55 GMT).
The brewer’s second quarter figures were well ahead of predictions due to a rapid rebound in demand when pubs, restaurants, and other entertainment facilities reopened.
Earnings per share soared to 2.30 euros, 20% over projections for 1.89, while net sales jumped 24.3%, with nearly two-thirds owing to price rises. Organic sales grew 7.6%, while premium brands grew 10%.
The corporation remarked that the weak euro partially boosted its results. The weak euro might add 1.5 billion euros to second-half net revenue and 140 million euros to net profit, based on current exchange rates. Second-quarter earnings were 1.27 billion euros.
