Matthew Boyle London
HEINEKEN, the Dutch brewer that spurned an overture from SABMiller last month, reported third-quarter sales growth that missed estimates, extending the run of European companies hurt by sustained softness across the continent and in Russia.
Revenue increased 0.2 percent from a year earlier, the Amsterdam-based company said yesterday, compared with the 1.5 percent median estimate of 11 analysts. Beer volume fell 0.2 percent, compared with the 0.5 percent gain predicted by analysts. Both figures are reported on a so-called consolidated basis, and exclude the effects of acquisitions, disposals and currency swings. The shares dropped.
The decline in Europe, along with the continued fallout from sanctions against Russia, has affected industries as varied as luxury goods to industrial equipment. Heineken’s beer volume in central and eastern Europe fell 6.6 percent and dropped 3.1 percent in western Europe, missing analysts’ estimates. Even so, the company confirmed its outlook for the year for operating profit margin expansion to be ahead of its medium-term guidance of a 40 basis point expansion.
“The main miss in the numbers is clearly the western European region,” Marco Gulpers at ING said. “However, the confirmation of earnings before interest and taxes growth for the year should bring comfort.”
Brewers such as Heineken, SABMiller and Anheuser-Busch InBev have pursued growth through acquisitions in recent years as sales volumes have declined in the US and Europe. Heineken, which termed a takeover approach from SABMiller as “non-actionable”, said on August 20 that it expected growth to moderate in the second half of the year.
Heineken is the latest in a string of European consumer companies to report results that fell short of estimates. Diageo posted a decline in revenue in the region, missing expectations, and British American Tobacco reported yesterday nine-month cigarette volume that fell more than anticipated.
Heineken cited increasing regulation in Russia and a “softening” economy for a decline in beer volume there, while sales in Poland were hit by price competition. In western Europe, “exceptionally high levels” of rain during the summer curtailed beer drinking in the UK, France and Italy.
“Amid a volatile global environment and poor weather during the high-selling season in Europe, we maintained top-line growth,” Jean-François van Boxmeer, Heineken’s chief executive, said.
Outside of Europe, Heineken’s shipments rose 6.5 percent in Africa and the Middle East, helped by a new brewery in Ethiopia, and by 8.7 percent in Asia, fuelled in part by sales of Tiger beer in Vietnam. In the Americas, sales volume rose 3.2 percent thanks to continuing gains in Mexico.
Heineken’s namesake brand boosted volume 3 percent, the company said, below the 6.6 percent uptick in the first half of the year. – Bloomberg