Top story

Beers sales at Heineken have rocketed in the first quarter as pubs reopened across Europe and Asia and the Dutch brewer hiked prices.

However, CEO Dolf van den Brink warned prices for drinkers would rise further in the year ahead as cost pressures continued to mount.

Revenues increased 35.9% to €7bn in the first three months of the year, with organic growth of 25%, as volumes rose 5.7%.

Heineken pointed to “assertive” pricing and premiumisation as the main drivers of an accelerated top line, with volumes for the Heineken brand up 12.9% in the quarter.

In Europe, revenues increased 46.1% as on-trade volumes tripled, but it was not enough to match the brewer’s pre-pandemic performance, remaining below 2019 by a low-single digit.

Net profits surged to €417m, compared with €168m a year ago, thanks to the top-line growth.

“We had a solid start to the year, in line with our expectations, especially benefitting from strong channel mix from the partial on-trade recovery of Europe and assertive pricing across all regions,” van den Brink said.

“Looking ahead, we see more macroeconomic uncertainty and expect significant additional inflationary headwinds putting further pressure on our cost base. We will take additional actions including pricing to manage these challenges whilst we continue to invest in superior, balanced growth and sustainable value creation.”

Heineken maintained its guidance for the year but warned inflationary pressures were expected to depress consumer disposable income and hurt beer consumption later in the year.

The group added it continued to benefit from hedges taken in 2021, but further cost pressures were emerging from rising input costs, supply chain challenges and from its decision to leave Russia.

Shares in Heineken opened 2.9% higher to €91.94 this morning.

Morning update

Danone has reported a “good” start to the year as net sales increased 7.1% on a like-for-like basis to €6.2bn in the first quarter.

The French multinational relied on higher prices to boost sales, with volumes up just 2.2%.

The growth was led by its specialised nutrition products in China and North Asia, which grew 15.3% and benefitted from a low base of comparison.

In Europe and North America, like-for-like sales increased 5.7% and 5.5% respectively driven by all categories, while its dairy and plant-based products and water brands led the 7% growth in the rest of the world.

Danone said the operating environment remained highly volatile, with sustained supply disruptions and broad-based inflation around mid-teens levels.

But it reiterated 2022 guidance, supported by pricing action, mix management and productivity efforts, for like-for-like sales growth of between 3% and 5%.

CFO Juergen Esser said: “Our teams are mobilised to make 2022 the foundational year it ought to be for Danone as we move towards sustainable value creation for all.”

DTC wine retailer Naked Wines has performed in-line with its expectations for the year ended 28 March 2022, the business said in a trading update.

Group sales increased 3% year on year and by 72% on a two-year basis, driven by a retention rate of 80% and a 11% rise in repeat customer sales.

The business also increased its active base of ‘angel’ customers by 9% to 964,000 and said adjusted EBIT was low-single digits.

CFO Shawn Tabak said the group was well positioned to take advantage of its long-term growth opportunity in the US.

CEO Nick Devlin added: “Our results reflect the hard work and high-quality execution of our teams around the globe, and I am especially pleased to see the improvements to our customer experience and product range reflected in sustained retention rates above our expectations.

“I look forward to further outlining our plans for long-term growth at our full year results presentation in June.”

Struggling cake decoration group Real Good Food has reported disappointing results for the year ended 31 March, performing below its expectations.

Revenues for the year increased 9% to £40.5m but remained below pre-pandemic levels, while adjusted EBITDA of £700k equated to a much-reduced pre-tax loss of £2.8m.

Following a strong first half in which the group was well ahead of the prior year and back to 2019 levels, revenues during its busiest period between October and December disappointed and were “well below” expectations.

Real Good Food said its third-quarter performance was affected by severe shortages and erratic deliveries of key ingredients and services, compounded by high absence rates because of the Omicron variant, which hurt its ability to fulfil customer orders.

Significant input cost increases also dragged down profitability in the final quarter of the year.

The board is focused on reducing complexity and waste, other cost saving projects and selective new product launches to make the business as competitive as possible going forward.

Executive chairman Mike Holt said the past few months had been “very difficult” and led to the performance for the financial year being worse than he had hoped.

“The unprecedented cost increases being experienced by all businesses are being passed through to our customers but there is a timing lag which is impacting profitability,” he added.

“The group is determined to hunker down, control costs and protect revenues, and has the support of its loan holders and major shareholders to navigate this difficult time.”

Just Eat Takeaway has downgraded its full-year forecasts after orders declined in its first quarter.

Total orders in the first three months of the year fell by 1% to 264.1 millions, with North America 5% behind and UK and Ireland flat on the previous year.

However, gross transaction value rose 4% to €7.2bn thanks to higher average transaction value.

Just Eat said that during the pandemic it benefitted from a rapidly increasing consumer base in a short period of time, adding more than 20 million active consumers since April 2020. As a result, the company was temporarily experiencing a corresponding higher-than-normal absolute churn level in the first half of 2022.

“While growth in the second quarter of 2022 will remain challenging, key growth drivers, such as average monthly order frequency and returning consumers are expected to remain above pre-pandemic and even above pandemic levels,” the group said.

Updated guidance for 2022 is for gross transaction value to grow by mid-single digits, down from mid-teens, and adjusted EBITDA margin in the range of -0.5% to -0.7% of GTV, previously -0.6% to -0.8%.

CEO Jitse Groen added: “After two years of exceptional growth, we maintain the same high level of orders that were processed during the Covid-19 restrictions.

“Our priority for 2022 lies in enhancing profitability and strengthening our business. We expect profitability to gradually improve throughout the year, and to return to positive adjusted EBITDA in 2023.”

The FTSE 100 is up 0.1% this morning to 7,606.13pts.

Shares in Danone have soared 8% higher to €56.83 on the back of its positive update, while Naked Wines bounced back from yesterday’s losses to rise 13.1% to 373p.

Just Eat Takeaway shares remained buoyant despite the downgrade to its forecast, rising 1.8% to 2,210p.

Real Good Food sank 2.6% to 1.9p after its disappointing update.

Yesterday in the City

The FTSE closed in the red following the Easter break, down 0.1% to 7,611.14pts for the day.

Shares in dessert shop chain Cake Box sweetened yesterday as the business revealed a 50% jump in sales for the year to the end of March as new outlet openings and the ending of Covid restrictions gave it a boost. The stock - which has been hit this year by accounting irregularities - ended the day up 7.3% to 206.6p, although it remains 43% down for the year to date.

McColl’s Retail Group continued its mini-recovery as the market awaits the outcome of talks with lenders over the c-store chain’s future, with the stock up 16% to 4.4p.

Sainsbury’s, Tesco and M&S recovered some of last week’s losses to rise 1.9% to 246.5p, 2.1% to 271.8p and 0.4% to 1,143p respectively, while M&S fell another 0.7% to 148.1p.

Other risers included B&M European Value Retail, up 1.7% to 546.8p, and Parsley Box Group, up 1.2% to 20.8p.

WH Smith saw shares sink by 3.3% to 1,467p after the retailer admitted to a cyber security breach at its online greeting cards business Funky Pigeon.

Fallers included Naked Wines, SSP Group and Deliveroo, down 5.1% to 340.1p, 5.5% to 231.2p and 5.3% to 107.8p respectively.