Heineken share price jumps as H1 results beat projections

Heineken NV, the worlds third-biggest brewer, reported on Monday better-than-expected profit and revenue for the first six months of the year thanks to strong demand for its premium brands and solid sales in emerging markets.

The Dutch brewer said that first-half net profit surged 81% to €1.144 billion from €631 million a year earlier on the back of a 6.7% jump in consolidated revenue to €9.896 billion from €9.274 billion during the first six months of 2014.

“These solid results are in line with our expectations and demonstrate the further progress we have made in delivering on our strategy,” said Jean-Francois van Boxmeer, Chairman of the Executive Board & CEO. “Despite strong prior year comparatives and challenging conditions in a number of markets, we saw positive top line and profit growth… Whilst economic conditions and the pricing environment in certain key markets remain challenging, we are confident of continued progress and our full year expectations are unchanged.”

The results, which topped market expectations, were boosted by strong performance in the Asia Pacific, Americas and the Africa Middle East regions, helping offset sluggish sales in Europe. Group beer volume grew by 1.0% in the first half, helped by a 6.1% jump in Asia Pacific that was in part driven by a double-digit percentage growth in Vietnam thanks to the Tiger brand.

Beer volume in the Americas, where Heineken brews in Mexico and exports to the United States, grew 3.6%, despite a slowdown in the second quarter. The Africa Middle East region also recorded an uptick in volumes, by 2.8%, despite a challenging economic environment in Nigeria and worse performance in Egypt and in the Democratic Republic of Congo.

Sales in Europe continued to slide, partly due to the comparison basis being boosted by last years World Cup and better weather conditions. Beer volumes in Western Europe slid by 3%, while Central & Eastern Europe saw a 2% decline. To battle declining beer consumption in Europe and the US, Heineken has looked upon emerging markets where it made a series of acquisitions in recent years, while also bolstering sales of its premium brands as it seeks to attract young consumers.

The company said that its flagship Heineken brand saw volumes jump 4.7%, having performed well in almost all regions, while the Desperados, Affligem and Sol Premium brands saw double digit volume growth.

The brewer also reaffirmed its outlook for the full year, with revenue projected to increase at a more moderate level compared to 2014 and weighted more to the second half, but warned it expects a continued challenging external environment.

Heineken NV traded 4.95% higher at €75.29 per share at 09:50 GMT in Amsterdam, marking a year-on-year increase of 44.65%. The company is valued at €41.32 billion. According to the Financial Times, the 28 analysts offering 12-month price targets for Heineken NV have a median target of €75.00, with a high estimate of €109.00 and a low estimate of €64.00. The median estimate represents a 4.54% increase from the previous close of €71.74.