Heineken Achieves Sales Growth, but Faces Higher Q1 Costs

Europe's largest brewer announced today that it sold 4.7 percent more beer by volume on a like-for-like basis in the January-March period with revenue increasing by 6.8 percent.

18 Apr 2012 --- Heineken has announced that its operating profit fell slightly in the first quarter as higher costs offset a greater than expected rise in sales and the effects of its latest savings drive.

Europe's largest brewer announced today that it sold 4.7 percent more beer by volume on a like-for-like basis in the January-March period with revenue increasing by 6.8 percent.

However, the company also said that its operating profit declined due to increased fixed costs in certain high inflationary markets, investments and increased input costs, such as for barley. The company did not give a precise figure for this.

Heineken, for whom Western Europe makes up 45 percent of revenue, said it stuck to the outlook issued in February.

The company said that “volume in the key markets of UK, France, Spain and Italy all grew moderately”. In Central and Eastern Europe, group beer volume grew 6.7%, on an organic basis, led by solid volume growth in Russia, Poland, Austria, Belarus, Slovakia and Hungary.

In Africa and the Middle East, group beer volume grew 15.8%, including a consolidation impact of 8.7% related to prior year acquisitions in Nigeria and Ethiopia. Organic growth of 7.1% was driven by strong volume growth in Nigeria and volume gains in the Democratic Republic of Congo.

Volume of Heineken grew 8.7% in the International Premium Segment, driven by strong brand performances across the Africa and Middle East, Americas and Asia Pacific regions. The US, Vietnam, China, Brazil and Nigeria were the largest contributors to Heineken brand growth.

Volume of Strongbow grew 4.7% helped by a return to volume growth in the UK. Strongbow continues to perform well in South Africa, while solid brand growth was also achieved in the US, Canada and the Caribbean. Strongbow Gold cider was launched in Hungary in the quarter.

Heineken aims to offset its greater production costs by a mix of selling more beer at higher prices and with a new 500 million euro cost savings plan running until 2014.