Earnings

Heineken has strong start to year, cautious on Nigeria

Heineken reports strong start to year
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Heineken reports strong start to year

Heineken, the world's third-largest brewer, sold far more beer than expected in the first quarter of the year, helped by growth in Vietnam, the Chinese New Year and an earlier Easter boosting sales in Europe and the Americas.

The brewer of Heineken, Europe's top lager, Tiger and Sol retained its full-year forecast, but said currency developments continued to weigh on results and warned of difficulties in Nigeria due to the lower oil price.

The Dutch brewer, set to be dwarfed by market leader Anheuser-Busch InBev's impending $100 billion plus purchase ofSABMiller, said beer volumes rose by a like-for-like 7.0 percent to 43.5 million hectolitres, well above the median 41.3 million hectolitres in a Reuters poll.

Sales were higher in all regions, with growth of 23 percent in Asia-Pacific and expansion in the Africa, Middle East and Eastern Europe region, against expectations of a slight dip.

Source: Heineken

Excluding Nigeria, volumes would have been down in the latter zone. However, Heineken said underlying trading conditions in Nigeria were tough and the lower oil price hitting consumers, who were opting more for cheaper brands.

"It is becoming increasingly challenging to obtain hard currency in the market, and the uncertainty regarding a possible devaluation of the naira continues to impact the business adversely," Heineken said.

It added that it would be more difficult in future quarters to register growth after a first three months flattered by comparison with a weak start to 2015 due to an election.

Overall, Heineken has said it expects revenue and profit growth this year excluding scope and currency changes, with margin expansion in line with its medium-term target of about 40 basis points per year.

However, it has forecast a 35 million euro hit to net profit from currency moves.