Shares in Dutch brewer Heineken fell nearly 8% on Monday after an expected boost in beer sales driven by sports events failed to materialize and the company took a €874 million ($948 million) payout on its investment in China.
The maker of Europe’s best-selling beer raised its full-year operating profit forecast, but some analysts said it was not as bullish as they had hoped.
The company reported a 12.5% increase in operating profit for the first six months of the year, slightly below analysts’ forecast of 13.2% based on the company’s consensus. Revenue and volume for the first half were also slightly below expectations.
Heineken now expects organic operating profit growth of 4% to 8% in 2024, up from its previous forecast of low to high single-digit growth. This remains below the 8.2% growth currently expected by analysts.
The company’s chief financial officer, Harold van den Broek, said the forecast reflected weakness in June and July in Europe, where colder weather impacted Heineken’s performance and an expected boost from sporting events failed to materialise.
Heineken and other European brewers had hoped to sell more beer this year, helped by events such as the European Championship in Germany and the Olympics in Paris.
Shares of Heineken’s rivals fell on Monday, with Carlsberg down 4% and Anheuser-Busch InBev down 0.8%. They have not yet released half-year results.
Investors have been eager for Heineken to upgrade its forecasts since it disappointed the market in February by setting a broad-based outlook for earnings growth, drawing criticism for being overly cautious.
Over the long term, Heineken is well positioned for growth, but small, recurring disappointments cloud that picture, said Louis Jamieson, senior global equities analyst at Sanlam Investments.
“It’s hard to get this story moving if there are always these little problems,” he said.
Heineken has written down its stake in China Resources Beer by about 20%, generating a net loss.
Van den Broek said this was simply related to the company’s declining share price, which was otherwise doing well.
Source: Terra
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