Dutch brewer Heineken raised its full-year profit guidance on Monday (Jul 29) despite missing half-year estimates and taking a US$949 million impairment.
The maker of Europe’s top-selling lager reported a 12.5 per cent rise in half-year operating profit, below analysts’ forecast of 13.2 per cent.
The world’s second-largest brewer, whose brands include Tiger and Sol, said a solid performance across its business during the first half, as well as plans to step up investments, gave it the confidence to raise its full-year profit guidance.
It now expects to deliver organic operating profit growth of between 4 per cent and 8 per cent in 2024, compared with its previous guidance of between low and high single-digit growth.
“Across the board we’re very pleased,” Heineken CEO and chairman Dolf van den Brink told journalists, adding the company planned investments across key markets and brands and planned to nurture further volume and revenue 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.
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Some investors felt Heineken had been overly cautious at a time when its rivals were upbeat and there was widespread optimism about the outlook for brewers.
Heineken’s new guidance remains below the 8.2 per cent growth analysts currently expect.
Chief financial officer Harold van den Broek said this reflected a weak June and July in Europe, where poor weather impacted Heineken’s performance and expected upsides from sporting events did not materialise.
Heineken wrote down the value of its 40 per cent stake in China Resources Beer, driving a net loss, though van den Broek said the writedown was related only to the value of the business’ share price, and not its quarterly performance, which had been good.
The shares of many Chinese companies have been hit by concerns about soft consumer demand. If this reverses, Heineken could raise its value again, executives said. REUTERS
