Heineken Lowers Full-Year Outlook After Decline in Earnings


Heineken, the Dutch brewing company, has adjusted its full-year outlook following a decrease in key earnings during the first half of the year. This decline is primarily attributed to lower volumes in the Asia Pacific region, which is typically a highly profitable market for Heineken.

Revised Expectations

Heineken now anticipates zero to mid-single digit growth in adjusted operating profit for the year, compared to the previous forecast of mid- to high-single-digit growth. The announcement of this changed guidance led to a decline in shares of the world’s second largest brewer, dropping as much as 7.5% in early trading. As of 0824 GMT, shares were down 5.1% at EUR91.94, having reached a low of EUR90.66 earlier in the session.

First Half Performance

During the first half of the year, Heineken reported an operating profit before exceptional items and amortization of acquisition-related intangible assets of 1.94 billion euros ($2.14 billion). This reflects a decrease of 8.8% on an organic basis compared to the same period last year. Notably, adjusted operating profit in the Asia Pacific region saw a significant decline of 34% to EUR400 million.

According to Heineken, the weaker demand in the Asia Pacific region can be attributed to both an economic slowdown and underperformance in Vietnam.

Outlook for the Second Half

Despite the challenges faced in the first half, Heineken expressed optimism for a strong turnaround in the second half of the year.

Financial Statistics

Net profit for the period amounted to EUR1.16 billion, down from EUR1.27 billion in the previous year. However, this figure fell short of the forecasted EUR1.31 billion based on one analyst’s estimate from Factset. Overall volume also experienced a decline of 5.6%.

In terms of revenue, Heineken reported a rise to EUR17.44 billion from EUR13.49 billion, surpassing consensus forecasts of EUR14.91 billion based on estimates from four analysts obtained from FactSet.

Explanation for Performance

Heineken cited several factors contributing to its financial performance. While revenue growth and productivity improvements were achieved, they were offset by inflationary pressures on input and energy costs as well as front-loaded incremental investments to enhance brand power, digitalization, capability, and sustainability initiatives.

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