Heineken nears year-on-year parity in Q1 - results data

Three-month sales flat (+0.9%) at EUR6.54bn (US$7.4bn)
‘Africa & Middle East’ leaps 17.6%, offsetting 4.9% decline in ‘Europe’
Sales down by high single digits in US
Brand Heineken volumes rise 4.6% led by ‘Asia Pacific’ (+18.5%)

Heineken has posted an ominous-looking set of first-quarter results, with sales rising by their lowest rate in recent quarters.

The brewer’s top line for the three months to the end of March was technically flat, inching up by just 0.9% on the corresponding period a year ago. The showing confirmed Heineken’s warning two months ago, however, that Q1 would “face a high comparison base and be impacted by technical factors”.

Geographically speaking, Heineken’s ‘Americas’ region delivered a 2.1% sales slip due in part to the later Easter break this year (Easter last year fell at the end of March). At the same time, “market weakness” was observed in the US where “Hispanic consumers” exhibited “weak sentiment”, the company said. Elsewhere in the region, Mexico was up by low single digit, while Brazil was down by mid-single digits on the cycling of price increases implemented in April last year.

Over in Heineken’s ‘Europe’ heartland, sales were down by 4.9%, again thanks to Easter’s timing, as well as “challenging customer negotiations” that resulted in lower promotional activity and “short-term retail disruptions”. ‘Asia Pacific’, meanwhile, grew sales by 3.9% as growth returned for the company in Vietnam.

The ‘Africa & Middle East’ region, which is preparing for a change of leadership in July, continued to benefit from inflation and currency devaluation-led price increases in Nigeria – the country’s sales soared by “the sixties”. Subsequently, AME was the standout region, booking a 17.6% sales jump.

Also of note in today’s results announcement was the “portfolio transition towards profitable variants” by Heineken in wine through its Heineken Beverages division in southern and East Africa. The business revision echoes Constellation Brands’ sale of a raft of US wine brands to The Wine Group, announced last week.

The group’s namesake brand was up in volume terms by double digits in 25 markets last quarter, including in China, Nigeria and Vietnam. The 4.6% volumes rise for brand Heineken was led by ‘Asia Pacific’ (+18.5%), although ‘Europe’ declined by just over 4%. Heineken 0.0 was affected by the forementioned “technical factors”, namely order phasing for exports to “some key … markets”, leading to a low single-digit volume dip.

Turning to the prospects for the rest of the year, the group flagged the likelihood of ongoing weak consumer sentiment as well as “broader uncertainties, including recent tariff adjustments”. “To navigate this fluctuating environment, we remain agile in our allocation of capital and resources,” Heineken said. “With over 95% of our volume locally produced, our brewery footprint is advantageous.”