Heineken – Beer Volumes Up As Asia Pacific Recovery Gives Sales A Boost, Guidance Unchanged

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Heineken N.V. (AMS:HEIA)’s third quarter net revenue saw organic growth of 19.8%, to €7.8bn, driven by a sharp recovery in the Asia Pacific region as restrictions eased from last year. Total volumes grew 7.6%, while net revenue per hectolitre was up 11.1% as Heineken raised prices to mitigate rising costs.

Beer volume grew 8.9% organically, 1.4% ahead of pre-pandemic levels. Again, the Asia Pacific recovery was the main contributor though all regions showed growth.

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Heineken expects to deliver €1.7bn in cost savings by the year end.

Dolf Van Den Brink, Chairman and CEO said: “Our premium portfolio outperformed, led by Tiger and Heineken, including the roll-out of Heineken Silver.” But warned “We increasingly see reasons to be cautious on the macroeconomic outlook, including some signs of softness in consumer demand.”

Heineken has reiterated its full year guidance.

Heineken's Earnings

“Revenue growth was given a nice bump in the third quarter as the Asia Pacific region rebounded following restriction in the same period last year. Looking past that, performance was pretty good with low single digit growth in the other regions.

Premium brands continue to deliver, despite consumers having plenty to think about when it comes to where to spend their falling real income. Heineken’s ‘EverGreen’ strategy is heavily reliant on the continued premiumisation trend so any major global economic turmoil could upset the apple cart.

Management gave an underhand warning in today’s update that there were some signs of consumer weakness creeping onto the radar.

Progress on the cost-saving programme looks to be going well, with €1.7bn in gross savings expected this year. That’s important, as the group’s currently having to hike prices to offset inflated costs and whilst beer volumes are still increasing for now, streamlining operations rather than raising prices will certainly be the preferred way to keep margins moving in the right direction.”

Article by Matt Britzman, Equity Analyst at Hargreaves Lansdown