Heineken has announced a bigger than expected rise in first-quarter beer sales after European bars reopened, allowing the company to keep to its 2022 forecasts despite the market uncertainty caused by the war in Ukraine.
The world’s second-largest brewer saw its total beer volumes rise by 5.2% on a like-for-like basis, beating a 3.5% forecast. The increase in Europe was 11.5% as Heineken’s beer sales in bars and restaurants almost tripled on the same period last year when Covid-related restrictions impacted the on-trade.
The maker of Heineken, Sol and Tiger lagers, and Strongbow cider highlighted that Russia’s invasion of Ukraine had brought additional uncertainty to the global economic outlook and commodity markets, with mounting inflationary pressures impacting households’ disposable income.
Heineken said it was benefiting from hedging positions taken in 2021 but still faced rising costs, supply chain challenges and pressure from its decision to leave Russia. As a result, it warned that it will have to put up beer prices for consumers still further despite concerns around the impact this will have on demand for its products.
“We had a solid start to the year, in line with our expectations, especially benefitting from strong channel mix from the partial on-trade recovery of Europe and assertive pricing across all regions,” said CEO Dolf van den Brink.
“Looking ahead, we see more macroeconomic uncertainty and expect significant additional inflationary headwinds putting further pressure on our cost base. We will take additional actions including pricing to manage these challenges whilst we continue to invest in superior, balanced growth and sustainable value creation.”
Heineken noted that net revenue per hectolitre rose 18.3% during the quarter, driven by “assertive pricing” and consumers switching to more upmarket beers. That followed a rise of 8.8% in the previous six months.
Net revenue rose 24.9% to €5.8bn, resulting in net profit for the quarter of €417m, more than double the figure from a year earlier.
The company still maintained its guidance of “stable to modest” improvement in its operating profit margin in 2022.
Trevor Stirling, an analyst at Bernstein, said: “That average prices can grow this much, with volumes also still growing strongly, goes a long way towards proving the ability of the company [and] the sector to put through the necessary pricing to offset input cost headwinds this year and next.”
Shares in Heineken rose nearly 3% in early trading.
