Heineken, the world’s second-largest brewery, has experienced a greater than expected increase in beer sales in the initial quarter, delivering the company’s first year-on-year quarterly improvement in volumes in the past twelve months. This increase maintains the company’s projected profit growth for 2024.
On Wednesday, Heineken declared a 4.7 percent rise in beer volumes organically for the quarter of January-March, surpassing the 2.5 per cent growth projected by industry experts in a poll crafted by the company itself.
Having faced a decline in volume growth in 2023 in light of increased pricing to counteract escalating costs of energy and barley, among others, Heineken’s concentration has been on rejuvenating volume growth this year.
In light of all regions demonstrating enhanced volume and revenue balance, CEO Dolf van den Brink claimed that an early Easter and exclusive effects helped the quarter.
Nonetheless, economic challenges and uncertainties continue, according to Heineken, which highlighted that despite a strong start to the year, the reported growth could not be automatically applied to the future quarters.
In February, investors felt let down due to Heineken’s broad spectrum forecast for operating profit growth for the year, which could fluctuate anywhere from a low to a high single-digit percentage. This tentative forecast at the start of the year was partially attributed to uncertainties in key markets of Vietnam and Nigeria, which negatively influenced performance the previous year.
Volumes in Nigeria and Vietnam saw significant increases – nearly 20 percent and low-teen percentages respectively. Laurence Whyatt, an analyst at Barclays, notes the promising recovery in the high-margin market of Vietnam as well as notable performance in Mexico and Brazil.
In Brazil, Heineken’s titular brand earned the top spot by value for the quarter, while beer volume saw an impressive high-single-digit increase.
Reporting an organic surge of 9.4 percent to €6.85 billion before one-offs, net revenue surpassed expectations of a growth of 7.2 percent as stated by analysts. Heineken adds that currency translation lowered the number by 4.6 percent. (Reuters, Copyright Thomson Reuters 2024)