Heineken shares dive on weak results

Investing.com – Heineken N.V. (AS:HEIO) (AS:HEIN) shares plummeted on Monday after the company reported weaker-than-expected Q2 results which fell short of company-compiled expectations across almost every line of the profit and loss statement. 

Despite the underwhelming results, the company has raised and narrowed its FY24 guidance to 4-8% organic profit growth from the previous low-high single-digit range. This revision is in line with company-compiled consensus, which is already at the top end at 8.2%.

Q2 organic sales growth missed expectations by -300bps, and organic profit growth was up 12.5% versus the consensus of +13.2%, despite a 10bps decline in advertising spend. “Volume growth missed to a larger extent than price, which reiterates our concern around Heineken's persistent price increases,” said analysts from RBC Capital Markets in a note.

Regionally, the standout was Africa, the Middle East, and Eastern Europe, despite volatility in Africa. In Europe, Heineken reported share gains in most markets; however, Q2 organic revenue growth declined by -2.1% compared to expectations of +3.4%, the brokerage added. The Vietnamese beer market is stabilizing, but performance in the Asia Pacific region missed expectations significantly.

Heineken has announced plans to increase marketing investment in the second half of the year after a -10bps decline in advertising spend in the first half. The company also adjusted its tax guidance to 28% from 29%.

RBC Capital Markets rated the stock as "Underperform," setting a price target of EUR 77.00.