Dutch brewer Heineken reported a 12.5% rise in half-year operating profit after an anticipated boost from sporting events in June and July did not materialise.
The results and an €874-million ($948 million) impairment related to its Chinese partner China Resources Beer disappointed investors even as the maker 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%. Its first-half revenue and volumes also came in slightly below expectations.
An analyst note from Barclay's stated, 'Heineken gathered momentum following optimistic comments at a recent conference leading the market (and ourselves) to improve estimates. However, these results missed forecasts, suggesting there was a gap between the company's messaging and analyst expectations. This needs to close.'
The world's second-largest brewer, whose brands include Tiger and Sol, also took an €874 million ($948 million) impairment related to its Chinese partner China Resources Beer.
Company executives however said the brewers' first-half performance was solid. Alongside plans to step up investments, this gave them confidence to raise their full-year profit guidance.
Outlook
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 Heineken 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, Harold van den Broek, said the guidance reflected a weak June and July in Europe, where poor weather impacted Heineken's performance and an expected boost from sporting events did not materialise.
Ongoing caution in Heineken's latest forecast would likely disappoint some, Bernstein analyst Trevor Stirling said in a note.
"There is food for bulls and bears," he said of Heineken's results, adding 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' share price, and it was otherwise performing well.
In June of this year, the brewer suspended the operation of one of its breweries in Vietnam due to weak demand and changing consumption patterns in the Southeast Asian country.
News by Reuters, additional reporting by ESM.
