Operating profit showed organic growth of 12.5%, below the company’s consensus estimate of 13.2%.
Beer sales were expected to grow 3.4% but actually increased just 2.1%.
Heineken slumped to a net loss of 95 million euros ($103 million), mainly due to a non-cash impairment on its 874 million euro investment in Chinese brewer CR Beer. Heineken said the impairment was not due to CR Beer’s performance but to a drop in CR Beer’s share price on concerns about consumer demand in China.
“We are very pleased with our strong first half performance,” Heineken CEO Dolf van den Brink said on CNBC’s “Squawk Box Europe” on Monday, saying volume growth was “balanced and broad-based across the world,” with premium up 5 percent.
In an update eagerly awaited by analysts, Heineken revised its forecast for organic operating profit growth this year to a range of 4% to 8%. The company’s previous guidance had indicated growth in the low to high single digits.
“Heineken has gained momentum following optimistic comments at its recent conference, leading to an improved outlook for the market (and the company),” Barclays analysts said in a note on Monday.
“But the results were below expectations, suggesting there was a gap between the company’s messaging and analyst expectations. This gap needs to be closed.”
Europe was the biggest miss, with profits growing just 0.2 percent compared with an expected 15.1 percent, mainly due to higher promotional costs in a highly competitive market, Barclays said.
Heineken said it “consolidated its leadership” in sales of low- and no-alcohol beers, with its non-alcoholic beer Heineken 0.0 growing 14 percent. The category recorded double-digit growth in markets such as Brazil, Egypt, Vietnam and the UK.
Van den Brink said Monday that the category, and Heineken 0.0 in particular, is becoming “increasingly important” to the company.
According to market research, growth of low- and no-alcohol products, including beer, is expected to significantly outpace the overall alcohol industry over the next few years, making them a key target for established brands and new entrants alike.
Van den Brink also said that input cost pressures on the company had eased significantly.
“In Europe and the Americas, input costs are much more contained than last year, which has allowed us to significantly reduce pricing, which is very important as we rebalance our sales growth with both volume and price growth,” he told CNBC.
