Russia hammers Heineken in Q1

Russia hammers Heineken in Q1

Weak demand for beer in Europe has caused Heineken to report a drop in sales for the first quarter of 2010.

Like-for-like beer volumes for the three months to the end of March fell by 5% on the same period of 2009, to 23.5m hectolitres, Heineken said today (21 April).

Net sales fell by 3.5% on a like-for-like basis, to EUR2.9bn (US$3.9bn), as price rises and low single-digit volume growth in Africa, Asia and the Americas could not offset weakness in Europe.

Volume sales in Russia fell by 12% for the three months due to a three-fold duty tax rise on beer. Distributors had stockpiled beer at the end of 2009 in anticipation of the tax hike.   

Despite the sales decline, Heineken said that cost savings and a EUR142m gain on the transfer of brewing businesses in Southeast Asia helped it to increase net profits for the quarter. Earnings before interest and tax grew by mid-single digits, it said, without giving figures. 

The brewer attempted to shrug off the weakness in sales.

"The first quarter of the year is the least significant in terms of volume and profitability," it said, adding that the first quarter of 2009 accounted for around a fifth of full-year sales.

Heineken said it would continue to focus on cutting debt in 2010 as its three-year Total Cost Management programme enters its second year.

Heineken will use its annual general meeting tomorrow (22 April) to ask shareholders to approve the brewer's acquisition of Mexico's FEMSA Cerveza.