World’s third-largest brewer, Heineken is relying on higher beer sales in Africa, Asia and Latin America to drive revenue growth in 2014 following slowdown in several emerging markets in 2013.
The Dutch company yesterday said 2013 had been challenging with difficulties in Eastern Europe, Latin America and Africa. According to the company revenue grew by just 0.1 percent last year as price rises failed to offset a sharp decline in overall volumes. For 2014, Heineken said revenue should grow on a like-for-like basis and excluding currency translation effects.
Heineken expects its latest three-year savings plan, TCM2, to hit its 625 million euro ($855 million) target this year. Heineken shares were among the strongest performers in the FTSEurofirst 300 index of leading European stock, rising as much as 3.2 percent to 48.615 euros, the highest level in almost four weeks. The STOXX European food and beverage index was up 0.3 percent.
“There was no growth last year, so some growth in the next is better. I’d describe it as mildly optimistic after what has been a very weak year in 2013,” said Trevor Stirling, beverage analyst at Bernstein Research.
“The big drag came from central and Eastern Europe and the Americas and Africa didn’t deliver the level of organic growth they would have expected.”
Europe’s largest beer seller has a greater share of the sluggish western European market than rivals, but has boosted its emerging market presence by expansion into Mexico in 2010 and the buy-out of its joint venture partner in Asia in 2012. Heineken warned in October that it expected net profit before one-offs to fall by a low single digit percentage last year. In fact, it fell by 2.0 percent on a like-for-like basis to 1.59 billion euros.
Heineken said volumes had improved in Western Europe, in Africa and the Middle East in the second half, with a pick-up in large markets of Nigeria, Republic of Congo and the Democratic Republic of Congo in the fourth quarter.
“We had a very good last quarter in Nigeria. It is true that you see some changes in the market. You see an increasing value segment, in which we participate ourselves, but a brand like Heineken also continues to grow,” Chief Executive Jean-Francois Van Boxmeer told a conference call.
He added he was slightly more optimistic about Nigeria, with elections due next year. Elections typically prompt economic stimulus and so more spending on beer.
