BRUSSELS • Volatile markets and an acquisition in Brazil prompted Heineken, the world's second-largest brewer, to warn that its profitability this year would improve by less than the target it had set for the previous three years.

The Dutch brewer, whose Heineken lager is the top seller in Europe, had a target of increasing its operating margin by 40 basis points per year between 2014 and last year, but said it expected this margin to rise by 25 basis points this year.

Last year, Heineken's margins expanded by only 14 basis points, weighed down by the acquisition of the loss-making Brazilian business of Japanese rival Kirin. But Heineken said it was encouraged by the performance of its new Brazilian unit, the purchase of which made it the second-largest brewer in the country behind Anheuser-Busch InBev.

Heineken has gained in recent years from strong performances in its two largest markets - Mexico and Vietnam.

But it has faced struggles in Africa, notably Nigeria, where weak economic growth and low consumer sentiment have depressed beer consumption.

The brewer of Tiger and Sol lagers and Strongbow cider said beer volumes increased in all of its business regions last year, though growth in Europe was almost flat.

For the group as a whole, operating profit before one-offs last year came in at €3.76 billion (S$6.1 billion), a gain of 6.2 per cent.

REUTERS