Dutch brewer Heineken reported a 12.5% rise in half-year operating profit on Monday after an anticipated boost from sporting events in June and July did not materialise, missing analyst estimates and sending its shares down 7%.
The results and an €874 million euro 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.
China Resources Beer
The world's second-largest brewer, whose brands include Tiger and Sol, also took an €874-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.
Overly Cautious?
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.
Latest Forecast
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.
Progress On Margins
"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.
