CFO René Hooft Graafland told analysts on a call discussing Heineken’s Q1 2013 results this morning that Q1 was a seasonably small quarter, accounting for only 21% of group beer volumes in 2012.
He warned of challenging economic conditions in Western Europe, with austerity measures and high unemployment putting pressure on household incomes and reducing beer consumption.
On a group level, Heineken beer volume sales across its portfolio fell 2.7% in organic terms to 46.7m hectoliters, and although revenue rose 8.1% to 4.145bn (versus Q1 2012), it fell 2.7% in organic terms, i.e. discounting the effect of acquisitions.
But despite the gloomy sales figures, Heineken’s Q1 2013 net profit rose to €227m (€166m).
Poor weather in key markets
Group beer volumes fell everywhere in organic terms: The Americas (-2.4%), Africa & The Middle East (-4.3%), Central and Eastern Europe (-3.0%) and Western Europe (-8.7%).
Hooft Graafland said: “In the first quarter, this impact was further exacerbated by poor weather conditions in key markets across Europe, as well as in the US and Mexico.
“The effect of one selling day less in the quarter and plant destocking in France and the US accounted for over 2% of the [group beer] volume decline in the quarter,” he added.
Glossing volume sales of Heineken down 4.7% on Q4 2012, cycling 8%+ growth in Q1 2012, Hooft Graafland first noted strong growth in South Africa, South Korea, Taiwan and Russia.
“However, performance was impacted by the poor weather across Europe and declines in key brand markets of France and the US,” he said.
“The destocking impact of these two countries accounted for approximately 3% of the brand’s volume decline in the quarter.”
French tax levy ‘will have an effect’
Across Europe, record low temperatures of up to 5C lower in the UK, France and The Netherlands, coupled with record rainfaull in Spain and Portugual, hit Heineken’s quarterly trading volumes.
Volume sales in France fell substantially in Q1 following retailer stock build-up in Q4 2012 ahead of an signficiant excise duty increase on beer levied from 2013.
“Despite this, we have applied to the full excise increase while our brand investments and strong outlet execution have contributed to further share gains in the country,” Hooft Graafland said.
While he admitted that Heineken anticipated a full year 2013 mid-to-high single-digit sales decline in France, Hooft Graafland insisted that the brewer’s portfolio was “in pretty good shape”.
“But obviously, the big increase in the beer prices will have an effect on that market,” he added.