Heineken sees below-target margin improvement on Brazil unit

[LONDON] Heineken NV, the world's second-largest brewer, forecast profitability this year will be below its medium-term target as it integrates a Brazilian business it bought from Japanese rival Kirin.

The operating profit margin will expand about 25 basis points this year as sales gain, the brewer said in a statement Monday.

Brasil Kirin's "integration and results are very encouraging," chief executive officer Jean-Francois van Boxmeer said in the statement.

Volume growth was led by Asia Pacific, where Vietnam is one of Heineken's largest markets. Last year, the company agreed to buy rival Kirin's business in Brazil, where the beer market is beginning to return to growth after a slump caused by a currency devaluation and political upheaval. Heineken is also investing in African markets such as Mozambique and Ivory Coast.

Heineken's medium-term target is for a 40 basis-point increase in profitability each year, excluding acquisitions and unforeseen events.

Revenue rose 5 per cent on a so-called organic basis in 2017, the company said. Analysts expected 5.7 per cent growth.

Adjusted operating profit of 3.76 billion euros (S$6.1 billion) beat the consensus estimate of 3.65 billion euros.

BLOOMBERG