just On Call - Heineken admits volumes backtrack after weak Q1

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Heineken's CFO has admitted that problems in key markets have curbed volumes momentum for the brewer, with full-year growth likely to come in under expectations.


In 2012's full-year results, released in February, Heineken posted a year-on-year volumes lift of 2.8%, and said 2013 will equal or better that. However, in a call with analysts today (24 April), René Hooft Graafland said the Dutch brewer has lowered its outlook after important regions such as Nigeria and Western Europe underperformed. 

“The momentum that we had from last year, we will probably be a bit below that in volumes, “Hooft Graafland said. “We continue to see revenue and volumes growth, but less than expected.” 

The climbdown follows Heineken's disappointing Q1 results, released today, in which all regions posted volumes declines. Worst hit was Western Europe, which saw group volumes drop by 8.1% as government austerity measures and cold weather hit demand. Nigeria, Heineken's biggest market in Africa, saw volumes fall by mid-single digits as soft consumer demand continued.

“The Nigeria rebound is later than expected and it is an important growth market for us,” Hooft Graafland said. “Western Europe remains a difficult market.”

Despite the volumes drop, Hooft Graafland said the company is maintaining a positive outlook, as the reasons behind the declines, such as consumer confidence and weather, are not under its control. “We are not too sombre or negative,” he said. “We are convinced we are doing the right things.”

Hooft Graafland said Q1 volumes weaknesses in the core markets of Brazil and Russia are not expected to continue and should help make up for declines elsewhere. He also said Heineken price rises of about 4% in Central & Eastern Europe have seen competitors follow suit, ensuring that the hikes take root. 

Last month, Heineken said it aims to turn volume gains in Central & Eastern Europe into value growth as increasingly affluent consumers chase their “five-minute luxury”.

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