Heineken shares fall 8% after first-half revenue miss

Heineken shares opened almost 7% decrease on Monday, after the brewing big’s first-half revenue progress got here in weaker than analysts had anticipated.

The corporate’s inventory was buying and selling down 7.9% at 12:18 p.m. London time.

Working revenue confirmed natural progress of 12.5%, beneath a company-compiled consensus forecast of 13.2%.

Beer gross sales, which had been anticipated to develop at 3.4%, rose by simply 2.1%.

Heineken tumbled to a internet lack of 95 million euro ($103 million), totally on the again of a non-cash impairment of 874 million euro on its funding in Chinese language brewing agency CR Beer. Heineken mentioned the write-down was the results of the decline in CR Beer’s share worth amid considerations about shopper demand in China, somewhat than over the Chinese language firm’s operational efficiency.

“We’re fairly happy with a stable efficiency within the first half,” Heineken CEO Dolf van den Brink instructed CNBC’s “Squawk Field Europe” on Monday, describing quantity progress as “balanced and broad-based throughout our world footprint,” with a 5% improve in premium merchandise.

In an replace that had been keenly-awaited by analysts, Heineken revised its working revenue natural progress forecast for the yr to a spread between 4% to eight%. The corporate’s steerage had pointed to low to excessive single-digit progress beforehand.

“Heineken gathered momentum following optimistic feedback at a current convention main the market (and ourselves) to enhance estimates,” Barclays analysts mentioned in a Monday be aware.

“Nonetheless, these outcomes missed forecasts, suggesting there was a spot between the corporate’s messaging and analyst expectations. This wants to shut.”

The foremost miss was in Europe, which noticed simply 0.2% revenue progress versus an expectation of 15.1%, largely due to elevated promotional spending in a aggressive market, Barclays mentioned.

Heineken mentioned it “consolidated management” in low and no-alcohol beer gross sales, with Heineken 0.0 — a no-alcohol beer — up 14%. The class noticed double-digit progress in markets together with Brazil, Egypt, Vietnam and the U.Ok.

Van den Brink on Monday described the class as “increasingly essential” to the corporate, notably Heineken 0.0.

Market analysis suggests progress in low and no-alcohol merchandise, together with in beer, is ready to significantly outpace the broader alcohol trade over the approaching years, making it a key goal for established manufacturers, in addition to newcomers.

Van den Brink additionally mentioned enter value pressures on the corporate had considerably diminished.

“In Europe and the Americas, enter prices had been a lot, way more modest than final yr, permitting us to take a lot much less pricing. That is crucial to rebalance our income progress to each quantity and pricing progress,” he instructed CNBC.