Heineken has acknowledged that the conflict in the Middle East, particularly involving Iran, could negatively impact its beer sales. The Dutch brewer, which recently announced plans to cut 6,000 jobs, reported stronger-than-expected first-quarter revenues and volumes but warned that escalating energy costs and inflation might dampen future demand.
Strong Q1 Performance Amid Challenges
The world's second-largest brewer, behind Anheuser-Busch InBev, saw a 2.8% rise in organic net revenue for the first quarter, surpassing analyst predictions of 2.3%. Total volumes also grew by 1.2% organically, defying forecasts of flat performance. However, the company cautioned that the ongoing conflict in the Middle East is driving up the cost of essential brewing fuels and glass bottles, threatening to push up prices across consumer goods and potentially curbing discretionary spending on beer.
Job Cuts and CEO Search
Heineken is preparing to cut 6,000 jobs and is seeking a new chief executive following Dolf van den Brink's unexpected departure in January. The brewer, known for brands like Tiger and Sol, did not address the CEO search in its latest results statement. Van den Brink, who will step down on 31 May, said: "Global trade has become more complex and volatile, with impacts on energy availability and costs in certain markets. This leads to inflationary pressures, which might affect consumer sentiment in the medium-term." He did not mention the war directly.
Regional Performance and Outlook
In the first quarter, strong performance in Asia Pacific helped offset declines in beer sales in both Europe and the Americas, including the US and large beer markets like Brazil and Mexico. The company reiterated its full-year outlook for between 2% and 6% organic operating profit growth, based on the assumption of a temporary rather than a prolonged disruption in global trade.
RBC Capital Markets analyst James Edwardes Jones described Heineken's first quarter as "reassuringly uneventful" in a note.
