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Heineken Misses First-Half Profit Estimates on $950M China Writedown
July 29, 2024
Beer maker Heineken’s first-half profits fell short of expectations Monday as the Dutch-based company posted a $949 million writedown on the valuation of its stake in China’s largest brewer.
According to Fortune, the brewer took the impairment charge on its investment in state-owned China Resources Beer due to concerns about consumer demand in the mainland that have affected its share price. Heineken has a 40% stake in the Chinese company.
The hit was a key factor in the company’s overall net loss of 95 million euros, or $103 million, in the first half, down from its 1.1 billion euros profit in the same period last year.
Reuters reported that the company also said it didn’t get the sporting events-related jolt it expected because of rain in June and July. Beer sales, which were expected to grow at 3.4%, rose by just 2.1%.
Heineken was expecting sales to be helped by events such as the 2024 European Football Championship in Germany and the Olympics in Paris.
“Typically big sports events like the Euro Cup have a positive impact but the weather has been significantly below long-term averages and below last year, impacting our business,” CEO Dolf van den Brink said, according to the New York Post.
Heineken revised its operating profit organic growth forecast up for the year to a range between 4% and 8%. This is below the 8.2% growth analysts currently expect, Reuters said.
Heineken posted an operating profit growth of 12.5%, under the consensus forecast of 13.2%, per CNBC.
“We are quite pleased with a solid performance in the first half,” Heineken’s Dolf van den Brink told the cable channel’s “Squawk Box Europe” on Monday. He characterized the group’s volume growth as broad-based, with a 5% increase in premium products.
The world’s second-largest beer company, which makes more than 300 beer brands, including Amstel, Red Stripe, Sol, and, of course, Heineken, said it would pick up marketing investment in the second half in key areas.
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