Analysis

Heineken’s H1 2019 results deliver "negative surprises" - Analysis

Most popular

Pernod breaks boundaries with Chinese distillery

New Remy Cointreau CEO - just-drinks thinks

Pernod on its Chinese whisky project - Interview

Chapoulaud-Floquet's Remy legacy - j-d thinks

Let your brand creativity go wild at festivals

MORE

Analysts have flagged a lack of communication by Dutch brewer Heineken, as results for the first half of the year came with a few surprises. 

An analyst blamed Heineken for poor communication ahead of this weeks results

An analyst blamed Heineken for poor communication ahead of this week's results

The brewer yesterday reported an organic sales rise of 6% in the period, while organic operating profits came in flat. Heineken said profits were hit by increased input and logistics costs, which were up by mid-single digits in the six months to the end of June.

Societe Generale analyst Toby McCullagh says in a note to clients that despite an easy comp and persistently upbeat commentary from management through the early summer conference season, Heineken "missed H1 operating profit consensus by more than 6%". 

"Whilst a sharp drop-off in June volume momentum (weather-related) cannot have helped, the phasing of H1/H2 cost pressures should have been better communicated and management has a credibility headwind as well as an operational challenge to meet its unchanged full year guidance," McCullagh adds.

Both McCullagh and Bernstein analyst Trevor Stirling outline "surprises" at the margin level, with Stirling calling the surprise "negative" and McCullagh calling margins "dreadful".

"Europe and the Americas faced hefty cost inflation, primarily on aluminium, exacerbated by transactional FX on the Brazilian Real and Mexican Peso," says Stirling. "There was a further impact from increased investment in e-commerce and IT system upgrades and the phasing of global sponsorships."

In fact, disappointment was in all regions except Asia, notes McCullagh. 

"By category, the sources of disappointment were not a surprise, but the magnitude (and phasing) was," he adds. 

Overall, Bernstein's Stirling says the market was "distinctly unimpressed", and the stock yesterday closed down 6%, although the analyst points out that this "probably also reflects the strength of the stock going into earnings - trading at an all-time high and up 3% last week alone". 

He calls yesterday's fall an "over-reaction, as the miss was primarily driven by margin pressures which we have high confidence will reverse in H2".

But Soc Gen's McCullagh warns that Heineken "needs to get better at communicating with the Street" as the brewer reiterated guidance for the full year for mid-single digit organic EBIT growth.

"For guidance and consensus to have any credibility, the company needs to give a clear path to H2 improvement against a sequentially far tougher comp," McCullagh concludes. 

Asahi lines up Australian domination at a price that's right - Analysis


Sectors: Beer & cider, Company results

Companies: Heineken

Expert Analysis

Flavored Water (Soft Drinks) Market in United Kingdom - Outlook to 2022: Market Size, Growth and Forecast Analytics

Flavored Water (Soft Drinks) Market in United Kingdom - Outlook to 2022: Market Size, Growth and Forecast Analytics

Flavored Water (Soft Drinks) Market in United Kingdom - Outlook to 2022: Market Size, Growth and Forecast Analytics...

VIEW REPORT

Related Content

"The door is open" for guidance upgrades - Carlsberg H1 2019 - Analysis...

Strong H1 for Carlsberg fails to temper fear over what lies ahead - Analysis

Strong H1 for Carlsberg fails to temper fear over what lies ahead - Analysis...

Carlsberg lining up a

Carlsberg lining up a "mixed bag" for 2018 - Analysis...

How did Heineken perform in its H1 2018? - results data

How did Heineken perform in its H1 2018? - results data...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?