Heineken shares slump after flat beer sales in Europe

[MongiIG]

You know valuations are stretched when a company reports sales growth of 8.9% and the stock falls more than 10%. This was the case for Heineken, the world’s second biggest brewer, which fell short of forecasts of a 12% rise.

 

 Jeremy Naylor | Writer, London | Publication date: Wednesday 26 October 2022 

While European sales were a disappointment, revenues from Asia outperformed. The company also warned of an uptick in raw material costs.

 

Heineken Q3 numbers

The world's second largest brewer, Heineken, has reported earnings today, which suggests that there is a slowdown in the habits of beer drinkers across the European markets.

Share price chart

Let's take a look at the share price chart which really says it all.

The company said this morning that beer volumes in the latest third quarter (Q3) rose by 8.9% on a like-for-like basis, with the strongest increase in Asia, but compared to the 12% average market expectation. So this was a lot lower in terms of the sheer volumes of beer that's gone through the taps at Heineken.

But you can see here the market reaction is down heavily in today's session. We're currently down by a margin of 10.4% almost two hours into the trading day on this Wednesday, and we're not too far away either from the line of support that was established with the low we saw back on the 7th of March this year, down at 77 37.

This trades in the Dutch market is currently trading at €79.16 and clearly you can see if it breaks this line down here, it will then be at levels not seen since October 2020, so we are considerably lower than we were at the beginning of today's session on the back of this number out today.

Heineken is one of these companies that can benefit a lot from big sporting events. So, the World Cup could be a turning point in the fourth quarter, but we won't know any more about that clearly until well into the period.

And I guess if European teams get through, then there is a chance that Heineken may well see a better result than would otherwise be the case, but that has yet to be sorted out.

The bottom line is that European markets have softened over recent weeks, as reported today by Heineken.