Heineken Revenue Misses Analyst Estimates as Europe Wanes

Heineken NV, the Dutch brewer that spurned an overture from SABMiller Plc last month, reported third-quarter sales growth that missed estimates, extending the run of European companies hurt by sustained softness across the continent and in Russia.

Revenue increased 0.2 percent from a year earlier, the Amsterdam-based company said today, compared with the 1.5 percent median estimate of 11 analysts surveyed by Bloomberg News. Beer volume dropped 0.2 percent, compared with the 0.5 percent gain predicted by analysts. Both figures are reported on a so-called consolidated basis, and exclude the effects of acquisitions, disposals and currency swings. The shares dropped.

The decline in Europe, along with the continued fallout from sanctions against Russia, has affected industries as varied as luxury goods to industrial equipment. Heineken’s beer volume in Central and Eastern Europe fell 6.6 percent and dropped 3.1 percent in Western Europe, missing analysts’ estimates. Even so, the company confirmed its outlook for the year for operating profit margin expansion in 2014 to be ahead of its medium-term guidance of a 40 basis point expansion.

“The main miss in the numbers is clearly the Western European region,” said Marco Gulpers, an analyst at ING. “However, the confirmation of EBIT growth for the year should bring comfort.”

Heineken shares fell as much as 2.8 percent in Amsterdam trading and traded 2.3 percent lower as of 9:12 a.m., limiting the stock’s advance this year to 16 percent.

Industry Consolidation

Brewers such as Heineken, SABMiller and Anheuser-Busch InBev NV have pursued growth through acquisitions in recent years as sales volume have declined in the U.S. and Europe. Heineken, which termed a takeover approach from SABMiller as “non-actionable,” said Aug. 20 that it expected growth to moderate in the second half of the year.

Heineken is the latest in a string of European consumer companies to report results that fell short of estimates. Diageo Plc, the world’s biggest spirits maker, posted a decline in revenue in the region, missing expectations, and British American Tobacco Plc today reported nine-month cigarette volume that dropped more than anticipated.

Heineken cited increasing regulation in Russia and a “softening” economy for a decline in beer volume there, while sales in Poland were hit by price competition. In Western Europe, “exceptionally high levels” of rain during the summer curtailed beer drinking in the U.K., France and Italy.

“Amidst a volatile global environment and poor weather during the high selling season in Europe, we maintained top-line growth,” Jean-Francois van Boxmeer, Heineken’s chief executive officer, said in a statement.

Outside of Europe, Heineken’s shipments rose 6.5 percent in Africa and the Middle East, helped by a new brewery in Ethiopia, and by 8.7 percent in Asia, fueled in part by sales of Tiger beer in Vietnam. In the Americas, sales volume rose 3.2 percent thanks to ongoing gains in Mexico. Heineken’s namesake brand boosted volume 3 percent, the company said, below the 6.6 percent uptick in the first half of the year.

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