(Bloomberg) -- Heineken NV shares plunged after the Dutch brewer cut its earnings forecast on weakening consumption following double-digit price increases.

Operating profit slumped 22% on an adjusted basis in the first half, the Amsterdam-based brewer said Monday. Beer volume dropped more than expected as Heineken boosted pricing by almost 13%. 

Brewers are struggling to pass high raw material costs onto consumers without driving them away to cheaper brands. Heineken is the first of the big global beermakers to report first-half results, and its results may portend difficulties for rivals Anheuser-Busch InBev NV and Carlsberg A/S.

“The start of the year was all about passing on the inflation on our input costs,” Chief Executive Officer Dolf van den Brink said in an interview. “We front-loaded our pricing. We ran into a pretty strong economic slowdown in the key market of Vietnam, which is disproportionately important to us.”

The stock fell as much as 6.4%. Analysts were skeptical that the second-half rebound will be strong enough to meet the new lowered guidance. For the full year, Heineken now forecasts stable to mid-single digit operating profit growth.  

“The credibility of Heineken’s guidance is now in question,” Citi analyst Simon Hales wrote. He said the results are extremely disappointing.

The Dutch brewer forecast cost inflation to ease next year, which will reduce pressure to raise prices. Previously the guidance was for mid- to high-single digit earnings growth.

Vietnam and Nigeria accounted for more than half of the drop in first-half consumption, and demand in the Americas was soft, Heineken said. The Dutch company is the largest premium brewer in Vietnam, where it has been active for three decades, selling brands such as Tiger.

“This is the worst set of results we’ve had so far,” wrote RBC analysts James Edwardes Jones and Emma Letheren, referring to the consumer companies they cover.

Russian Woes

Heineken increased the impairment for its Russian business to €201 million ($221 million), writing down its entire value. The company said it’s still working to sell the unit, and it doesn’t expect any financial gain from the ongoing business or any divestment. 

“It is incredibly challenging to make an exit,” Van den Brink said. “We want to do it the right way, find a suitable buyer.”

Heineken predicted pricing will moderate and volumes will decline by a low single-digit percentage in the second half. The company is counting on a turnaround in profit during the period.

Demand for premium beer, the source of 40% of Heineken’s revenue, is more resilient, the CEO said on Bloomberg TV. “People are drinking less, but they are drinking better.”  

--With assistance from Sarah Jacob and Julien Ponthus.

(Updates with analyst comment in ninth pargraph)

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