Heineken shares fall on lower European beer sales

Heineken shares fell by as much as 2% as the Dutch brewing giant counted the cost on its sales of severe weather conditions in Europe during the first quarter of the year.

In a trading update, Heineken said that in its first-quarter, sales volumes in Europe fell by 1.7%, year-on-year, as the benefits of an earlier Easter holiday were offset by the severe cold weather that gripped much of north-western Europe.

However, the world’s second-largest brewer said overall beer sales grew by 4.3%, year-on-year, in the three months to the end of March, with strong performances in Asia and the Americas countering the weakness in Europe.

“Performance in the first quarter was in line with expectations, with volume growth benefiting from an earlier timing of Easter this year and a slow start last year. The Heineken brand grew by 8.1% and we saw continued growth momentum in key markets around the world,” said group chief executive and chairman, Jean-Francois van Boxmeer.

“Our full-year guidance remains unchanged,” he added.

Despite that, shares in the drinks group, which is behind such brands as Amstel, Tiger, Sol, and its eponymous lager, fell by 2%, before paring back slightly in later trading — an overall movement which surprised some analysts.

“It seems quite a strong share reaction. Europe is naturally somewhat weaker than expected, but other regions are good ... All in all, the results are reasonable, although helped by Easter and compared to a weak start to last year,” said KBC Securities analyst, Wim Hoste.

The earlier Easter meant stocking ahead of the festive period took place in March rather than April, helping to boost volumes by 6.8% in the Americas, while a later lunar New Year drove Heineken to an 11.3% gain in Asia.

Volumes in Mexico, Heineken’s largest market, were up by a high single-digit percentage and there was double-digit growth in its second-largest market, Vietnam, and in Brazil, where it increased its presence last year.

The brewer also registered improved business in Russia, Ethiopia, and Ivory Coast, though sales slipped in Egypt and Nigeria, its biggest African market.

The company retained its full-year outlook for its operating profit margin to expand by about 25 basis points.

It also said that negative currency effects on operating profit would be €200m, based on current exchange rates. In mid-February, it had put the figure at €190m.

Additional reporting: Reuters


More in this Section

Sony sells three million PlayStation VR headsets

House of Fraser collapsed owing creditors €539.75m, hitting brands such as Gucci

Business Grapevine: Successful Irish tech companies to compete for €1bn in UK funding

US threatens more sanctions in Turkey crisis


Today's Stories

Doubts Donald Trump’s growth spurt can be sustained

More From The Irish Examiner