Heineken Shares Plummet Following Weaker-Than-Expected Profit Growth

Heineken's shares experienced a significant decline on Monday, closing down 10.14% after the brewing giant reported first-half profit growth that fell short of analysts' expectations. The company's operating profit showed an organic growth of 12.5%, which was below the anticipated 13.2%. Additionally, beer sales rose by only 2.1%, compared to the expected growth of 3.4%. The company also reported a net loss of 95 million euros ($103 million), primarily due to a non-cash impairment of 874 million euros related to its investment in Chinese brewing firm CR Beer. The impairment was attributed to a decline in CR Beer’s share price amid concerns over consumer demand in China, rather than issues with the company's operational performance. Despite the disappointing financial results, Heineken CEO Dolf van den Brink expressed satisfaction with the company's overall performance, highlighting a 5% increase in premium product sales and a balanced growth across its global markets. In a revised forecast, Heineken adjusted its operating profit organic growth expectations for the year to a range of 4% to 8%, down from previous low to high single-digit growth projections. Analysts noted a significant gap between the company's messaging and market expectations, particularly in Europe, where profit growth was a mere 0.2% against a forecast of 15.1%, largely due to increased promotional spending. Heineken also reported strong performance in the low and no-alcohol beer segment, with its Heineken 0.0 product seeing a 14% increase in sales. This category is becoming increasingly important for the company, with notable growth in markets such as Brazil, Egypt, Vietnam, and the U.K.