NETHERLANDS: Weather dampens Heineken Q1 despite profits lift
- Q1 like-for-like net profits up by 36.7% to EUR227m (US$295.2m)
- Net sales increase by 8.1% to EUR4.15bn
- Q1 operating profits “increased in the mid-teens”
- Group volumes down by 2.7% organically
Heineken released a first-quarter trading update today
Heineken's acquisition of Asia Pacific Breweries has helped ramp up Q1 profits and sales but volumes dropped due to poor weather and European austerity measures.
Net profits increased by 36.7% to EUR227m (US$295.2m) in the three months to the end of March, the Dutch brewer said in a trading update today (24 April). Net sales climbed by 8.1% to EUR4.15bn over the same period, while operating profits increased “in the mid-teens”, the company said.
Profits and sales were boosted by Heineken's ongoing SGD5.4bn (US$4.3bn) integration of APB, which posted low double-digit volume and revenue growth in Q1, the brewer said. However, on an organic basis, excluding the impact of the APB buy, net sales dropped by 2.7% and operating profits slipped by “mid-single digits”, Heineken said.
Group beer volumes were also down organically, by 2.7%, with Heineken blaming the quarter's one-day-shorter selling period compared to last year. The brewer said tough global economic conditions and “unfavourable weather” were also to blame for the “weaker than expected” quarter.
The biggest volumes drop was in Western Europe, down by 8.7% organically, as cold weather and government austerity measures squeezed demand. Group beer volumes in the UK, Italy, Netherlands and Spain all declined in the mid- to high-single digits, Heineken said. Brand Heineken volumes dropped a precipitous 13.6% organically in the region.
Looking ahead, Heineken said global markets will remain tough, with European cutbacks likely to affect the company throughout 2013. The brewer also said inflationary pressure in Nigeria will impact volumes in the country, leading to lower organic growth.
Heineken's share price was down by 5% in trading this morning.
Heineken also said that its integration of APB is progressing well and remains expected to complete in June.
To read the company's official statement, click here.
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