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Heineken Reports Strong Revenue Growth but Falls Short of Analyst Expectations

The Dutch beer giant Heineken reported a revenue of 14.8 billion euros for the first half of the year, a 2.1% increase compared to the previous year. However, this was slightly below the analyst consensus of 15.2 billion euros.

The organic growth stood at 6.0%, also below the expected 7.7%. Beer volume increased organically by 2.1%, which was lower than the anticipated growth of 3.4%.

Heineken’s EBITDA result reached 3.1 billion euros with an EBITDA margin of 21.2%, surpassing last year’s figures. The operating profit increased to 2.1 billion euros, slightly below the expected 2.2 billion euros.

Forecast Upgrade

Following the report, Heineken announced a significant increase in investments in marketing and sales expenses for the second half of the year. Despite the challenges, the company raised its full-year forecast and now expects an organic growth in operating profit between 4 and 8 percent.

Heineken’s stock has faced headwinds this year, declining by over 13%. With the lower stock price and forecast adjustment, the stock is now trading at a P/E ratio of 16 based on next year’s earnings and further drops to 14 based on 2026 earnings forecasts. This is an attractive P/E valuation, considering the historical average of just under 23 over the past ten years.

Carlsberg Disappoints with Revenue and Forecast but Sees Positive Outlook

Danish Carlsberg reported a revenue of 21.6 billion Danish kroner in the second quarter, slightly below the expected 22.1 billion.

The organic sales growth amounted to 1.9%, also below the expected 4.4%. The adjusted operating profit for the first half of the year was 6.3 billion Danish kroner, slightly below the expectations of 6.5 billion.

Despite weak numbers from China and second-quarter sales impacted by poor weather in Europe, Carlsberg raised its full-year profit forecast. The company increased its forecast for organic growth in operating profit for the full year 2024 to 4-6%, up from the previous 1-5%.

Carlsberg noted strong results from its investments in Asia and increasing sales of non-alcoholic beer. The CEO, Jacob Aarup-Andersen, emphasized the company’s strong execution and cost control, despite volume challenges in certain markets due to poor weather and weak consumer sentiment.

Challenges in the Chinese Market

Carlsberg, however, provided a bleak outlook for the Chinese market, where beer consumers are increasingly opting for cheaper brands. The company generates about a fifth of its revenue in China.

”There is no doubt that the Chinese market is tough. It declined by 5% in the first half, and we see no improvement in the second half,” said Aarup-Andersen in a comment on the half-year report.

Since the beginning of the year, Carlsberg’s stock has declined by over 8% and reached its lowest level since March 2022.

Both brewing giants are navigating a complex environment that includes rising raw material costs, currency headwinds, and changing consumer behavior with a growing demand for non-alcoholic beer.

Despite investor skepticism towards brewery stocks, indicated by the historically low valuations for both companies and this year’s weak share price performance, analysts on the sell side are more positive about brewery stocks.

Heineken is followed by 21 analysts. 12 have a buy recommendation, 7 have a neutral recommendation, and two have a sell on the stock. The average target price is 97.4 euros, indicating a potential upside of over 22%.

Despite the tepid interest in brewery giants’ stocks, 13 out of 17 analysts have a buy recommendation on Carlsberg, and the rest have a neutral recommendation.