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Let's go to one of our top ones coming out this morning. Heineken has taken a one time impairment of more than eight hundred and seventy million euros for its steak in China's biggest brewer, on concerns over consumer demand, now the world's second large brewer, also narrowing its forecast
for its full year operating profit. Let's get a little bit more insight on some of these numbers and bring in the CEO of the company, Dolph Band and Brink joins us around the tay Well, I was gonna say around the table, but next time you'll have to join us around the table. Dolph, this morning, you join us down the line, walk us through some of these numbers, especially when it comes to this empairment charge. What should our audience know about this?
Good good morning, and thanks for having me from Amsterdam. Indeed before talking to China, if you allow me very shortly,
we are very pleased with our first half performance. Beer volumes of two percent, revenue up six percent, operating profit of twelve and a half percent, so very good operating leverage there, broad based growth across our four regions and the quality of the volume growth was very good and important, with beer volume up two, premium volumes of five and the Heineker brand of nine, so we had a very solid and positive first half of the year. Also, we
are quite pleased with our China partnership. The impairment that we had to take a non cash impairment, is a technical adjustment that we have to do because as a minority participation, we need to value this on the share price, and the share price of CRB listed in Hong Kong dropped below the level that we acquired a company or the stake in back in twenty nineteen. We don't believe this is a fair reflection of the underlying operating performance.
Since we took the stake in twenty nineteen, the network or CB has gone up by three hundred percent. Brand Heineken volume have gone up by four hundred percent. Also here today this year the heinekenvolume in China is twenty five percent. So we're very pleased by the performance of the unit, but we had to take this non cash impairment as a technical adjustment.
So Doten walk us through that broader consumer story because there's a lot of analysts. A lot of investors that are waking up this morning were looking at these numbers and saying, well, how much of this is a broader China story, given that in other sectors across Europe and across the world, Chinese weakness is a broader theme, how much of that eats into your bottom line?
Yeah, we are actually very pleased to see that broad based volume growth with modest pricing across the world. We still have high pricing in Africa due to devaluations and local inflation. If you take that out and look across APEX, across Europe, across the Americans, we see much more modest pricing than we have had in prior years. It really
allowed for volumes to bounce back. We are really looking for that kind of balance growth of our revenue between volume and revenue per hector lead key markets like Mexico, Brazil very pleased with mid to high single digit revenue growth. India very important, high single digit growth. Last year. We really challenged in Nigeria, where I'm proud of our teams are navigating some of the local volatility, but volumes of high single digit So our key major markets outside of
Europe performing well in Europe. We saw volumes, beer volumes slightly up, pricing slightly up year to date may look better, but we took a bit of a step back in June. We were expecting in June July upside from the sports events from the cycle of last year. That unfortunately didn't materialize, we believe mostly due to weather being much worse than we were hoping. You saw that particularly impact north western Europe.
East central Europe doing doing better in that regard, but in the aggregate at a half here mark, we're very pleased by the two percent volume, six percent revenue across our global global footprint. We remain cautious. Indeed, consumer sentiment, particularly in developed markets like North America Europe are yeah, still a bit subdued.
We would say, yeah, well, it's really fascinating. The sports wasn't wasn't a catalyst for the business. But as you say, you're you're blaming the weather on that front in northern Europe. What are current volumes looking like right now, dool in this the current quarter.
Yeah, we're always cautious to make those statements. Say we will update the market at the first or at the third quarter updates d of October. What We did say in our release that some of that subdued volume in June was flowing out, you know, over into July, and we believe mostly rather related. As I said, year to date May, our volume, a revenue growth in Europe looked very promising. We're very happy to see that we took a bit of a step back in June and now July.
We still have good you know, prospects for the for the remainder of the year. We believe, indeed, it's quite important that we keep the pricing models to allow the category to regain its affordability. We're also making a major step up in our marketing and selling investments in the second half of the year as we really intend to propel growth in the second half and the years to come.
That is that caution on pricing. Does that indicate you're seeing a little bit of softness, You're saying a consumer that it is a little bit more conservative right now?
Now. I think it has most to do with the recent past. Over the last one two years, we and orders the industry have to take disproportioned amount of pricing due to incredible inputs cost inflation that impacted our volumes. Last year. We had negative volume growth in our European markets launch here, and that's why we're very happy to see volumes bouncing back slightly up in the year to date,
with pricing revenue projectory leaders still slightly up. That's a good place to be because it's really about stabilizing the category in that kind of market. And then still a lot of goals coming out of our global footprints.
So do what's zero in on that pricing conversation as well, specifically in the States, because one of the conversations we're hearing at least on the consumer front out of the UK and likes of NeSSI, Unilever, etc. Is that as the volumes drop, the pricing is what's making up the difference. I'm curious how much headroom you have that should your volumes drop, how much room can you actually raise prices. Specifically when it comes to the American consumer.
Yeah, we are a relative smaller player in the US market. Our depletions to retail, we're download single digits. We outperform the market a little bit. So indeed, we still see a little bit of a consumer in the America in their market. I think for control the controllables, we're deliberately keeping our pricing modest but still in positive territory. And what's most important is invest in our brands. In our portfolio, premium beer continues to do very well, up five percent
and a half year. Mark brand Heinek and up nine point two very important and there's a lot of momentum there. In zero zero beer, we are by far the global market leader. We calculated that we captured around fifty percent of the growth of the segment over the last five years. With Heinek zero zero. We have the number one zero
zero beer brand on the planet up fourteen percent. So it's control the controllables, invest in our brand portfolio, invest in premium beers, invest in zero zero, and that's that is what we will focus on going forward.
So Dolph, listen, talk about one of your competitors, if we can, Carlsberg is venturing in to the soft daring space. Is that something you would consider broadening out beyond beer.
I cannot make make statements, you know, on on future M and A. We are selling softwrinks in different parts of the world. We are proud to be softwrink bottlers in part of our global footprint. When it makes sense to local markets. We will, you know, proudly continue and contemplate that kind of diversification. But we remain first and foremost a beer company, a beer and cider company, and we believe there's still a lot of embedded growth to unlock.
And again that's giving us the confidence to plan for this material increase in our marketing and selling expenses in the second half of the year and going forward.
Well, we look forward to seeing how that all play. That Hanekase, Dolphin and Brink will have to leave the conversation there. We thank you so much for joining us.