Total consolidated volumes at Heineken nv fell by 3.9% over the three-month period while the world’s second-largest brewer – and Europe’s largest – reported an overall volume decline of 14% for the month of March itself as pubs, clubs and restaurants closed down around the globe.
“Our performance for the first quarter reflects the initial impact of those measures and volumes in March were obviously heavily affected,” commented Heineken’s Chief Executive Jean-Francois Boxmeer, Chairman of Heineken’s Executive Board today.
However sales of Heineken beer enjoyed growth of 5% during Q1. But a decline of 2.4% was registered for the month of March itself although the UK and some other markets reported “double-digit” volume growth.
But Heineken’s total consolidated beer volume in the UK showed a “mid-single digit” decline in March and for the quarter itself due to record rains in February and the lockdown in late March when Heineken’s pub estate was closed in the last week of the month.
In Europe itself, its beer volume declined organically by 1.4% over the quarter, with a decline of 15.3% in March itself.
“Third party volume declined 17.8% in the quarter and 49.2% in March as on-trade outlets closed impacting our wholesale operations,” stated the company which reported a 69% drop in net profits to €94 million from €299 million in Q1 2019, impacted by the volume drop in March due to Covid-19 and limited benefit from actions to mitigate costs.
“The initial impact of the Covid-19 crisis is visible in the volume performance of this quarter and is expected to worsen in the second quarter of 2020,” predicts Heineken, “The second half of the year is also expected to be impacted as lockdowns may be lifted but the impact on the economy is likely to remain.
The update pointed out that, “Our results in 2020 will be impacted by lower volumes and other effects, including:
- A significant risk of negative transactional and translational currency impacts due to the devaluation of emerging markets currencies versus the US dollar and the €uro.
- The increased risks on credit losses from customers, business continuity of small suppliers, impairments and non-effective hedge contracts.”