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It’s an incredibly bitter, double IPA-flavored pill that Heineken has to swallow.
Heineken Holding NV, the Netherlands-based maker of the world-famous holiday five pack beer, reported in its H1 earnings an impairment charge of €874 million (approximately $944 million) due to the declining value of a Chinese beer company it partly owns.
“The decline was driven by concerns on the macroeconomic environment in China and a negative view on consumer goods companies seen as more exposed to soft consumer demand,” according to Heineken’s earnings report.
According to the report, Heineken acquired a 40% share of CRH Ltd. (CBL) in 2019. CBL owns a majority stake (approximately 52%) in Hong Kong-based China Resources Beer. Heineken identified “a significant decline in the fair value of the investment below its cost” as of the end of June.
Overall, Heineken reported a 2.2% YoY increase in revenue and 4.3% decline in operating profit. Beer volume increased 2.1% organically from H1 2023, and volume for Heineken specifically increased 9.2% organically. According to Yahoo Finance, analysts predicted H1 beer volume growth would be a bit higher, at 3.4%.
Heineken’s volume growth was “broad-based,” according to the earnings report, with double-digit growth in more than 27 markets, including Brazil, China, Vietnam, and the Democratic Republic of the Congo.