LONDON (Reuters) – A Dutch brewing company Heineken Aramex (AS:) reported a 12.5% rise in operating profit in the first half of the year after the expected boost from sporting events in June and July failed to materialize, missing analysts’ estimates and sending its shares down 7%.
The results, and an 874 million euro ($948 million) loss on the value of its Chinese partner China Resources Beer, disappointed investors even as Europe’s top-selling beer maker raised its full-year outlook, as expected.
Operating profit in the first half of the year fell short of analysts’ expectations of 13.2%. The company’s revenue and sales volume in the first half also fell slightly short of expectations.
The world’s second-largest brewer, whose brands include Tiger and Soul, also took a loss of 874 million euros ($948 million) related to its Chinese partner China Resources Beer.
But company executives said the company’s performance in the first half of the year was strong, and that, coupled with plans to ramp up investments, gave them the confidence to raise their full-year earnings forecast.
Heineken now expects organic operating profit growth of between 4% and 8% in 2024, compared to its previous guidance of low to high single-digit growth.
Investors have been keen for Heineken to update its guidance since it disappointed the market in February when it set broad earnings growth expectations, drawing criticism for being too cautious.
Heineken’s new guidance remains below the 8.2% growth analysts are currently expecting.
The company’s chief financial officer, Harold van den Broecke, said the guidance reflected a weak June and July in Europe, where poor weather conditions impacted Heineken’s performance and the expected boost from sporting events did not materialise.
The continued caution in Heineken’s latest outlook is likely to disappoint some, Bernstein analyst Trevor Sterling said in a note.
“There is food for the bulls and bears,” he said of Heineken’s results, adding that positives included progress in margins.
Heineken has written down the value of its roughly 20% stake in China Resources Beer, resulting in a net loss.
Van den Broeck said this was only related to the company’s low share price, and that it had otherwise performed well.
($1 = 0.9218 euros) (This story has been corrected to show that Heineken’s stake in China Resources Beer is about 20%, not 40%, in paragraph 12)