Netherlands: Heineken disappoints its investors

Heineken has released today its half-year results, disappointing its investors that expected a higher profit from the growing business.

Despite a growth in consolidated beer volume and net revenue (baia), which increased organically by 3.1% and 5.6% respectively, Heineken’s operating profit grew only 0.3% organically to EUR 1.78 billion (USD 1.98 bn), missing analyst estimates by 6.7%. Expenses climbed 6.8% to €9.66 billion.

Heineken blamed “increased investment in e-commerce and technology upgrades”, and higher costs on strong aluminum prices, and increased advertising and media spendings for its nonalcoholic beer Heineken 0.0 in the U.S. “In the U.S. you always have to punch above your weight in terms of advertising investment,” Heineken’s Chief Financial Officer Laurence Debroux said.

Shares of Heineken fell sharply by about 6% on the Amsterdam stock exchange, after the lower than expected results became public.

Heineken’s chairman of the executive board and CEO Jean-François van Boxmeer was quoted as saying:

"Top-line performance was again strong in the first half of 2019, with organic net revenue growth across all regions and double digit growth in Asia Pacific as well as Africa, Middle East and Eastern Europe.  Revenue per hectolitre increased 3%, while volume growth in the second quarter was negatively impacted by weather in Europe and World Cup comparables from last year. The Heineken® brand grew by 6.9%, with Heineken® 0.0 now available in 51 markets.

Operating profit (beia) was stable as the impact of strong top-line performance was largely offset by input cost inflation, whilst we increased our investment in e-commerce and technology upgrades. For the full year, we continue to anticipate our operating profit (beia) to grow by mid-single digit on an organic basis.

Our partnership with CRE became effective at the end of April and we are pleased to have now joined forces to win in the fast-growing Chinese premium beer market.

Our strategic focus continues to be growth oriented with an ever-increasing emphasis on the sustainability of this growth, both socially and environmentally. We invest in innovation and operational excellence so our consumers enjoy our brands and we exceed our customers' expectations, whilst seeking productivity improvements and constantly reassessing our spending behaviour."

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