Heineken sees return to revenue growth after weak 2013

Wednesday 12 February 2014 18.51
Heineken's revenue grew by just 0.1% as price rises failed to offset sharp declines in overall volumes
Heineken's revenue grew by just 0.1% as price rises failed to offset sharp declines in overall volumes

Heineken, the world's third-largest brewer, forecast a return to revenue growth this year with higher beer sales in Africa, Asia and Latin America after a slowdown in several emerging markets.

The Dutch company makes Europe's top-selling Heineken lager as well as Sol, tequila-flavoured Desperados and Strongbow cider.

It said today that 2013 had been challenging with difficulties in eastern Europe, Latin America and Africa.

The brewer said revenue grew by just 0.1% last year as price rises failed to offset a sharp decline in overall volumes. 

For 2014, Heineken said revenue should grow on a like-for-like basis and excluding currency translation effects.

Growth and cost cuts should help its operating margin improve, it said. Heineken expects its latest three-year savings plan to hit its €625m target this year.

Europe's largest beer seller has a greater share of the sluggish western European market than rivals, but has boosted its emerging market presence by expansion into Mexico in 2010 and the buy-out of its joint venture partner in Asia in 2012.

Heineken warned in October that it expected net profit before one-offs to fall by a low single digit percentage last year. In fact, it fell by 2% on a like-for-like basis to €1.59 billion -  in line with the average expectation in a Reuters poll.

Heineken said volumes had improved in western Europe, in Africa and the Middle East in the second half, with a pick-up in large markets of Nigeria, Republic of Congo and the Democratic Republic of Congo in the fourth quarter.

"We had a very good last quarter in Nigeria. It is true that you see some changes in the market. You see an increasing value segment, in which we participate ourselves, but a brand like Heineken also continues to grow," chief executive Jean-Francois Van Boxmeer said.

He added he was slightly more optimistic about Nigeria, with elections due next year. Elections typically prompt economic stimulus and so more spending on beer.

In Mexico, where economic reforms have been pushed through, Van Boxmeer saw some early signs of growth. 
The country became only the second in Latin America to earn a "A" grade sovereign rating from Moody's this month. 

Diageo, the world's largest spirits maker, suffered lower demand in China and some other emerging markets due to tax hikes, discounting rivals and a Chinese government crackdown on gift-giving. It also said Nigerian consumers opted for cheaper beers after higher inflation hit disposable income.

World number two brewer SABMiller said last month that depreciation of key currencies against the US dollar had hurt its results. World number four Carlsberg reports next Wednesday and global market leader AB InBev a week later. 

Keywords: beer, heineken