Industry & Business

Heineken sales rise by 7%

Heineken sales rise by 7%

April 20
12:09 2016

downloadBrewer Heineken sold far more beer than expected in the first three months of the year, helped by growth over the Vietnamese and Chinese New Years and an earlier Easter, sending its shares to a record high.

The brewer of Heineken, Europe’s best-selling lager, Tiger and Sol retained its full-year forecast, but said currency developments would weigh more on results and warned of difficulties in Nigeria because of a lower oil price.

The Dutch brewer is the third player in the market but will be dwarfed by the combination of its two largest rivals when market leader Anheuser-Busch InBev’s completes a $100 billion plus deal to buy SABMiller.

Heineken shares rose as much as 4.6 percent to an all-time high of 86.95 euros. At 0845 GMT, they were up 1.2 percent and still among the strongest in the FTSEurofirst 300 index. FTEU3 of leading European stocks.

“A lot of the good elements have converged in Q1, but they are keeping their forecast and are cautioning that Q2 may not be as good,” said Andrew Holland, beverage analyst at Societe Generale.

Heineken said beer volumes rose by a like-for-like 7.0 percent to 43.5 million hectolitres, well above the median 41.3 million hectolitres forecast by analysts polled by Reuters.

Sales were higher in all regions, with growth of 23 percent in Asia-Pacific — strongest in Vietnam, Indonesia and Cambodia — and expansion in the Africa, Middle East and Eastern Europe region, against expectations of a slight dip.

Excluding Nigeria, volumes would have been down in its region. Heineken said underlying trading conditions in Nigeria were however tough and low oil prices were hurting the economy and prompting consumers to switch to cheaper brands.

“It is becoming increasingly challenging to obtain hard currency in the market, and the uncertainty regarding a possible devaluation of the naira continues to impact the business adversely,” Heineken said.

The prospect of growth in Africa helped to attract AB InBev to SABMiller but Heineken’s experience in Nigeria shows the road can be bumpy.

“It’s generally accepted among consumer goods companies that Africa is the last big growth prospect, but it doesn’t happen in a straight line,” Holland said.

Overall, Heineken has said it expects revenue and profit growth this year excluding consolidation and currency changes, with margin expansion in line with its medium-term target of about 40 basis points per year.

On Wednesday, it said the hit from currency moves would be 50 million euros on a net level, based on mid-April rates, more than the 35 million euros it gave in February.

Source: Reuters

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