The Amsterdam, Netherlands-based Heineken NV (AMS:HEIA), the world’s second largest brewer, has reported 11 percent higher profit in the first quarter of this year, thanks to a decent volume increase in Europe and Asia. The company has reported that volumes have gone up by 0.6% over the same period of last year. This came as a major surprise as the analysts had predicted the volume to actually go down by 0.5%.
Heineken Does Better in Asia Pacific and Western Europe
The expansion was strongest in Asia Pacific, where the volume has gone up by an impressive 5.4 percent. It was the sharpest in Cambodia. Europe has done better too by 0.5 percent, with Heineken showing improvements in several countries like Austria, Italy, the Netherlands, Spain, and France. Heineken says the operating margins are expected to grow by 40 basis points.
However, the volume has gone down in other parts of the world, namely the Middle East, Africa, Americas, and Eastern Europe. One exception was Mexico, where the sales growth was strong. But a weak Brazil pulled the overall sales from the Americas down to negative. The maximum sales drop was in Russia and Nigeria.
Jean-Francois van Boxmeer, the Chief Executive, issued a statement saying, “Asia Pacific continued to outperform and volume in Europe was solid. In Africa, the Middle East & Eastern Europe market conditions remain challenging, adversely impacting volume”. The CEO had been working on expanding the business in the fast-growing markets of Asia and Latin America and strengthening their presence in Africa.
While Africa and America are still down, but the strategy seems to be working in Asia. The strong growth there has impacted the overall bottom-line of the business.
The Heineken Stock Price Surges
The Heineken stock reported impressive early gains in Amsterdam on Wednesday after the company announced better than expected results. It went down after profit-taking but was still trading 1.32 percent higher by mid-day.
But it needs to be kept in mind that the first quarter is almost always seasonally less significant in terms of both volume and profit compared to the full-year results of Heineken. This year is unlikely to be an exception.
The beer volume of Heineken grew 7% last year. Asia did better than other regions as the sales went up by 23 percent, thanks to the Chinese and the Vietnamese New Year.