Thursday, February 21, 2008
Commodity Costs Hit Heineken Profits
There has been plenty written across the beer blog world about the impact of hop and malt shortages on the cost of a pint of beer. Add to that surging energy costs and what that does to the price of things like aluminum and the result is a giant hangover for the industry.
The little guys are hit hard, but much of that is under the radar. For publicly traded companies the blood and bruises go on full display when earnings reports are issued. Heineken NV of the Netherlands has released figures showing its annual profit dropped by 33 percent to $1.19 billion.
The Dutch brewer's results were below analysts predictions, causing a 6 percent drop in its stock. While it may be difficult to feel all that bad for a company reporting a billion dollar profit, the company says it expects a further crunch in 2008 with costs for key inputs going up 15 percent.
Heineken is boosting beer prices by 3 percent to 4 percent in most markets, except for the U.S. Heineken took a price increase here last year and it faces fairly tough competition from other imports, craft beers and premium offerings from domestic giants.