In this photo illustration, Heineken beer bottles are displayed on July 31, 2023 in San Anselmo, California.
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Beer giant Heineken’s shares opened down nearly 7% on Monday as profit growth in the first half of the year was weaker than analysts expected.
The company’s shares were down 6.7% as of 9:30 a.m. London time.
Operating profit grew 12.5% organically, missing the company’s consensus forecast of 13.2%.
Beer sales were expected to grow by 3.4%, but actually grew by only 2.1%.
Heineken’s net loss amounted to 95 million euros ($103 million), mainly due to a non-cash impairment on its 874 million euro investment in Chinese beer company China Resources Beer. Heineken said the writedown was the result of a decline in China Resources Beer’s share price due to concerns about consumer demand in China, rather than the Chinese company’s operating performance.
“We are very pleased with our solid performance in the first half,” Heineken CEO Dolf van den Brink told CNBC’s “Squawk Box Europe” on Monday, describing the volume growth as “well-balanced and consistent across our global footprint.” Broad-based” and sales increased fivefold. Quality products increase percentage.
In the latest news eagerly awaited by analysts, Heineken revised its forecast for organic growth in operating profit this year to between 4% and 8%. The company’s guidance previously pointed to low to high single-digit growth.
“Heineken gained momentum after upbeat comments at its most recent conference, leading the market (and ourselves) to raise expectations,” Barclays analysts said in a note on Monday.
“However, these results missed expectations, indicating a gap between the company’s information and analysts’ expectations. This needs to be closed.”
Barclays said the main miss came from Europe, where profits rose just 0.2% against expectations of 15.1%, mainly due to higher promotional spending in a competitive market.
Heineken said it “consolidated its leadership position” in low- and no-alcohol beer sales, with Heineken 0.0, a no-alcohol beer, growing 14%. The category saw double-digit growth in markets including Brazil, Egypt, Vietnam and the UK
Van den Brink said on Monday the category was “increasingly important” to the company, especially Heineken 0.0.
Market research shows that the growth of low- and no-alcohol products, including beer, will significantly outpace the entire alcohol industry in the coming years, making it a key target for established and new brands alike.
Vandenbrink also said that the company’s input cost pressure has been significantly reduced.
“In Europe and the Americas, input costs are much lower than last year, which allows us to adopt lower pricing. This is very important in rebalancing our revenue growth with sales and pricing growth,” he told CNBC.
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