Heineken volumes accelerate to drive H1 2017 sales - results

H1 reported sales up 4% to EUR10.5bn (US$12.3bn)
Organic sales lift 6%
Net profits surge 49% to EUR980m
Operating profits climb 31% to EUR1.6bn
Volumes edge up 3%
Brand Heineken volumes increase 4%

Heineken delivered volumes growth in all four of its reporting regions

Heineken delivered volumes growth in all four of its reporting regions

Heineken has posted a solid lift in H1 sales as volumes increased in all of its regions.

Africa, Middle East & Eastern Europe - Organic sales +12%, Beer volumes +2%

Beer volumes were down in Nigeria, Heineken's core African market, amid an economic recession. However, the brewer said declines were "more than offset" by strong growth in Ethiopia and South Africa. Sales per hectolitre growth of 12% drove sales, the company, said but analysts warned that inflation in Africa played a part in the growth. In Russia, volumes declined low single digit.

Americas - Organic sales +6%, Beer volumes +3%

Volumes growth in Mexico drove performance as Brazil, Panama and the US declined. Mexico's strong economy was behind the country's growth, Heineken said, whereas Brazil's economic woes were to blame for its decline. The brewer said that its acquisition of Brasil Kirin, completed on 31 May, should boost potential for further premiumisation. Heineken's US Mexican beer portfolio showed weakness after a spate of strong growth - both Tecate and Dos Equis were down in volumes.

Asia Pacific - Organic sales +5%, Beer volumes +6%

Beer volumes were strong in the region, but brand Heineken results were disappointing. The premium lager's volumes dropped 7% in Asia-Pacific because of weakness in China and Vietnam, Heineken said. Vietnam was hampered by an earlier Tet festival.

Europe - Organic sales +4%, Beer volumes +2%

Volume growth was driven by France, Italy, Spain and Portugal amid declines in Poland and Greece. In the UK, beer volumes declined low single digit in the wake of listing changes in Tesco supermarkets.

The brewer said that reported sales climbed by 4% in the first six months of the year. Growth was fueled by ongoing cost savings as well as volumes increases that accelerated in the second quarter.

Profits also surged, helped by the sales jump and cost savings, however EUR233m (US$273m) of a EUR285m net profits increase was down to an H1 2016 asset impairment in the Democratic Republic of Congo.

Heineken CEO Jean-François van Boxmeer said: "We delivered strong results in the first half year, with all four regions contributing positively to organic growth in volume, revenue and operating profit. Whilst economic conditions are likely to remain volatile, our expectations for the full year are unchanged."

Consolidated beer volumes jumped 3% with growth in all regions, including a 6% increase in Asia-Pacific. Performance was stronger in the second quarter with volumes up 4%, benefiting from Easter timing, good weather particularly in Europe and easier comparatives than in the first quarter, Heineken said.

The company's premiumisation efforts also continued, with brand Heineken volumes ahead of overall volume trends at +4%. The brewer warned, however, that lower volumes for its namesake lager in China and Vietnam "weighed negatively" on Asia-Pacific.
Bernstein analyst Trevor Stirling said the results were an "impressive set of numbers" despite organic sales receiving a boost from inflation in Africa.

"All of the reporting regions delivered positive organic volume, revenue, and operating profit growth, despite headwinds in a number of key individual markets, illustrating the benefits of Heineken's diversified geographic exposure," Stirling said.

Despite Stirling's support, the market appeared luke-warm on Heineken's results, with shares relatively flat in morning trading.

To read Heineken's official results, click here: http://www.theheinekencompany.com/media/media-releases/press-releases/20...

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