Heineken posts loss on China write-down

Dutch brewer Heineken posted a 95-million-euro (£80m) loss for the first six months of the year on Monday as its investment in China's biggest beer company took a hit.

The company took an 847-million-euro write-down from the decline in valuation of its stake in China Resources Beer, whose share price has fallen on the Hong Kong stock exchange.

Heineken acquired 40 per cent of the Chinese company in 2018.

The Dutch group said in its earnings report that the drop in CR Beer's share price was possibly due to "concerns on the macroeconomic environment in China and its impact on consumer demand".

China, the world's second biggest economy, has encountered severe headwinds in recent years, as a heavily indebted property sector, sluggish consumption and high youth unemployment weigh on confidence.

Heineken shares sank almost eight per cent on the Amsterdam stock exchange in late morning deals after it published the results.

Despite the loss, Heineken chief executive Dolf van den Brink said the Dutch company "delivered a solid first half of the year".

Global beer volumes rose by 2.1 per cent, while Heineken brand sales were up nine per cent in the first six months of the year, the Amsterdam-based brewer said.

Sales topped €17.8 billion, up 2.2 per cent, and were were driven by Heineken's largest operating companies in Nigeria, Mexico, Brazil, Vietnam and India.

Heineken's operating profit, however, fell by 4.3 per cent to €1.5 billion.

Heineken estimated growth in operating profit between four and eight per cent for the rest of the year, but added it would continue a cost-savings exercise targeting some €500 million.

A large proportion of the savings will be invested into marketing and sales, Heineken said, notably in Brazil, India, Mexico and South Africa.