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Investing.com -- Heineken ’s (AS:HEIN) stock dropped over 4% on Monday, following a mixed earnings report.
Stronger-than-expected EBIT growth and a stable outlook were overshadowed by ongoing foreign exchange pressures and weaker performance in Europe and the Americas.
The beer giant reported organic EBIT growth of 7.4% for the first half of 2025, surpassing the consensus estimate of 2.9%.
However, a significant foreign exchange drag offset the positive operating performance, leading to earnings per share (EPS) in line with expectations.
Heineken also maintained its full-year guidance for organic EBIT growth of 4% to 8%, but the stock’s decline suggests that concerns over currency impacts and regional underperformance outweighed the solid results.
Organic volumes for the first half of the year were down 1.2%, a smaller decline than the 1% expected by analysts.
Revenues, however, rose 2.1%, exceeding the street’s forecast of a 1.1% increase. The company attributed its revenue growth to favorable price-mix, despite a slight volume contraction, as highlighted in Jefferies’ report.
Operating in a challenging environment, Heineken benefited from cost-saving initiatives, realizing €300 million in savings in the first half of 2025, ahead of its full-year target of €400 million.
The company increased its savings goal to €500 million for the year, reflecting ongoing efficiency improvements.
In terms of regions, Heineken’s Africa, Middle East, and Eastern Europe (AME) business saw particularly strong performance, with organic EBIT growth of 102.8%.
Nigeria and Ethiopia were among the top contributors to this growth. Asia Pacific also delivered solid results, with 11% organic EBIT growth, driven by strong performances in Vietnam and India.
However, Europe was a weak spot, with a 4% decline in organic revenues and a 5.2% drop in EBIT, attributed to prolonged retailer negotiations and subdued demand in markets like Poland and Austria.
While these negotiations have now been resolved, they are expected to have a continued impact on the second half of the year.
Similarly, the Americas region saw a 2.3% decline in EBIT, with challenges in Brazil and the U.S. linked to both volume pressures and pricing difficulties.
The company also adjusted its full-year foreign exchange forecast. The FX headwind on EBIT is now expected to be €310 million, slightly improved from the prior estimate of €320 million.
At the net profit level, Heineken anticipates a FX impact of €160 million, an improvement from the earlier projection of €180 million.
Despite the mixed results, Heineken’s strategy remains focused on maintaining price increases and driving operational efficiencies to offset volume pressures.
The company now expects broadly stable volumes for the full year, with the ongoing price-mix contribution continuing to support revenue growth.
Heineken’s guidance for the full year of 2025, including organic EBIT growth in the range of 4% to 8%, and a revised gross savings target of €500 million, suggests confidence in its cost-reduction efforts and pricing strategy, even as it faces headwinds in some key markets.
“We do not expect consensus to move materially at this stage however door is open for upgrades after stronger than expected 1H,” said analysts at Jefferies in a note.