Heineken has reported a 12.5% rise in half-year operating profit, missing out in an expected boost from sporting events in June and sending shares sliding 7%.
The Dutch brewer missed analysts’ estimates as the results and an €874 million impairment related to its Chinese partner China Resources Beer disappointed investors.
Results were disappointing even as the makers of Europe’s top-selling lager raised its full-year guidance as expected.
The rise in half-year operating profit was below analysts’ forecast of 13.2% as its first-half revenue and volumes were also slightly below expectations.
Despite missing expectations, company executives said the brewers’ first-half performance was solid.
Alongside plans to set up investments, this gave them confidence to raise the full-year guidance.
Guidance
Heineken now expects to deliver organic operating profit growth of between 4% and 8% in 2024, compared to its previous guidance of between low- and high-single-digit growth.
Investors have been eager for investors to update its guidance since it disappointed the market in February by setting a wide-ranging outlook for profit growth, drawing criticism for being overly cautious.
Heineken’s new guidance remains below the 8.2% growth analysts currently expect.
Chief financial officer of the company Harold van den Broek said the guidance reflected a weak June and July in Europe.
The poor performance reflected poor weather and an expected boost from sporting events that did not materialise.
Bernstein analyst Trevor Sterling said in a note that ongoing caution in Heineken’s latest forecast would likely disappoint some.
On the results, Sterling said, “There is food for bulls and bears.”
He added that the positives included progress on margins.
Heineken wrote down the value of its 40% stake in China Resources Beer, prompting a net loss.
Van den Broek said this related only to a decline in the business’s share price, and it was otherwise performing well.
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