Heineken saw its quarterly sales volumes fall due to protracted retailer disputes across western Europe.
The world’s second-largest brewer its volumes were down 0.4% during the second quarter, worse than analysts’ estimates.
The drop was mainly due to ongoing disputes with regional buying groups in France, Spain and the Netherlands that lasted longer than the company anticipated. Heineken said this was now resolved, with France seeing a “strong recovery” last month.
However, it still pushed operating profits down by 5.2% in Europe for the first half of the year as the declines more than offset strong growth in the UK.
Despite the hit on sales, Dolf van den Brink, CEO and chairman, maintained the talks were important to “preserve future sustainable category development”.
In the UK, price rises helped push up net revenue by “a low single digit” with beer and cider volumes in decline.
“The main concerns from the market were based around European volumes,” said Laurence Whyatt at Barclays.
“Whilst these were weaker than expected, the mix of these volumes were much stronger given the improved UK on-trade performance, giving better margins.”
Heineken now expects global volumes to be “broadly stable” for the full year with higher prices driving revenue growth.
It still expects to see operating profit grow by 4% to 8% through the year. In the first half of the year, organic operating profit grew 7.4% due to the company’s expansion in Vietnam, India and China.
The brewer expects consumer spending to weaken in Europe and the Americas this year due to inflation pressures and the impact of a weaker US dollar.
Its share price fell over 5% following the announcement as markets took in the EU-US trade deal, which cemented a 15% tariff on EU goods such as Heineken’s.
The stock is down 11% over the past 12 months, yet as Jefferies analyst Edward Mundy noted, Heineken is in the early stages of a multi-year programme “designed to deliver superior and profitable growth” and so as confidence in its potential increases, its share price should improve.
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