Brewer of Tiger, Amstel and Moretti beers beats expectations in first quarter
The flagship Heineken brand grew 12.1% in the quarter, providing a boost to the Dutch group, which in February announced 8,000 job cuts © REUTERS
April 21, 2021 7:22 am by Judith Evans
Heineken, the world’s second-largest brewer, performed better than expected in the first quarter, as resurgent drinking in Asia and Africa helped compensate for the impact of tough European lockdowns.
The brewer of Tiger, Amstel and Moretti sold 5.4 per cent more beer in Asia during the quarter than a year earlier, and 9.9 per cent more in Africa, the Middle East and eastern Europe, helping to make up for a 9.7 per cent decline in European sales. Growth in Nigeria and South Africa was especially strong.
Overall beer volumes were flat, far better than the 5.1 per cent decline that analysts had expected, the brewer said on Wednesday. The flagship Heineken brand grew 12.1 per cent in the quarter, providing a boost to the Dutch group, which in February announced 8,000 job cuts.
“We had a solid start to the year, despite facing severe restrictions across many markets and the closure of the on-trade in Europe due to the pandemic,” said Dolf van den Brink, who became chief executive last June.
Heineken’s shares rose more than 4 per cent in early Amsterdam trading. The brewer’s stock has rebounded in recent months, rising almost 26 per cent since the start of November following a pandemic dip — though it has still underperformed rivals Anheuser-Busch InBev and Carlsberg over that time.
The company has suffered over the past year as Covid-19 restrictions hampered socialising globally, with a rise in drinking at home failing to fully make up for the closures of pubs and bars, which generally provide higher margin sales.
But Heineken reported net profit of €168m for the first quarter — up from €94m a year earlier, though down from €299m in 2019 — thanks in part to cost-cutting measures.
The latest numbers provide a comparison with the first quarter of 2020, when the pandemic began to take hold, though severe lockdowns were only imposed in most of the world in March.
“In the circumstances this was a good quarter for Heineken,” said James Edwardes-Jones, analyst at RBC Capital Markets. “Every region beat expectations in terms of organic beer volume growth.”
Van den Brink has made changes including slimming down the company’s head office, aiming to restore margins to pre-pandemic levels and eventually to exceed these. He said he would aim to “cultivate a cost-conscious culture”.
The company has previously said it expected sales growth to accelerate in the second half of 2021, depending on successful vaccination programmes.
It also announced new carbon targets last week, pledging to reach carbon neutrality across its full value chain by 2040.