Heineken sold more beer than expected in the first quarter, reporting its first annual quarterly growth in volumes in a year and maintained its earnings forecast for 2024 on Wednesday.
Commenting on performance in Brazil, the executive president, Dolf van den Brink, stated that the company became the number 1 brand in value in the country and that net revenue grew between 10% and 14% in the period, driven by growth of a high digits in volumes sold, price increases and focus on premium brands. The volume sold by the Dutch brewery grew by a high single digit, or something between 8% and 9%.
The second largest brewer in the world stated that global beer sales volumes increased 4.7% organically in the period from January to March, exceeding the 2.5% growth expected by analysts, according to a company survey.
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The news about sales in Brazil led the market to become more reticent about projections for the Brazilian competitor Ambev (ABEV3), with expectations already being for a modest first quarter of 2024. The company will release its numbers on the 8th.
“Heineken reported consolidated volume growth in Brazil in the high single digits. In the premium and mainstream (common) categories, the company grew its volumes in the low range, becoming the number 1 brand in market value in the country. In our view, this suggests that Heineken gained market share over Ambev in the quarter. According to our estimates, Ambev should report a 2.6% growth in beer volume in Brazil compared to the previous year”, highlights Bradesco BBI, projecting a number of beer sales well below that achieved by Heineken in the country. . The bank, however, has an outperform recommendation (above average performance, equivalent to purchase) for ABEV3 assets, with a target price of R$19.
For XP Research, Beer Brazil volumes should increase 2.5%, while the operation’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) should grow 24% in the annual comparison. Even so, for consolidated numbers, the expectation is for stability and a decline in earnings per share by 10%.
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Heineken’s focus on volume
Heineken is focused on restoring volume growth this year, which was hurt in 2023 when the company raised prices to offset rising costs from energy to barley.
Brink said all regions recorded higher volume and net revenue. Still, the brewery said it continues to view the economic environment as “challenging and uncertain.”
“Despite the solid start to the year, we cannot extrapolate revenue growth for the rest of the year,” he said.
Laurence Whyatt, an analyst at Barclays, highlighted a recovery in Vietnam, a high-margin market, as well as a promising performance by the company in Mexico and Brazil.
“There is no denying that the business appears to have turned a corner and we continue to expect improvements throughout the year,” said Whyatt.
(with Reuters)
