Shares in Dutch brewer Heineken jumped after the company reported beer volume rose strongly in the first quarter, with robust growth in emerging markets and America more than compensating for contraction in western Europe.
But the company's first-quarter trading update reported earnings fell slightly compared with the previous year, as cost inflation, investments and impairments outweighed the rise in sales.
In a trading update, the world's third-largest brewer said beer volumes grew organically by 4.7 per cent, beating analysts' consensus of 1.7 per cent. Growth was high everywhere in the world except for western Europe, where volume was 1.2 per cent down.
Rene Hooft Graafland, chief financial officer, noted in a conference call that the first quarter was the least important in the year, contributing some 20 per cent of sales.
Heineken lost out this week to ABInBev in its efforts to purchase CND, the largest brewer in the Dominican Republic. But the company acquired breweries in Nigeria and Ethiopia in the last quarter of 2011, as well as the Galaxy Estate of pubs in Britain.
Heineken said consolidation costs from those acquisitions had helped keep earnings down in the first quarter of 2012. The consolidation costs of its acquisition of Haiti's national brewer in January would be charged in the second quarter.
Earnings were also hit by a 23m impairment in China due to the failure to sell a subsidiary there. Net profits rose 16 per cent year on year, to 175m.
Richard Withagen of SNS Securities, who upgraded the stock to "accumulate" earlier this year, said in a note that he was "especially positive about the resilience of the operations in central and eastern Europe and Africa and the momentum of the Heineken premium brand".
Sales of Heineken's namesake brand grew 8.7 per cent, while sales of its new Desperados tequila-flavoured beer were up 10 per cent.
Heineken reiterated its performance goals for the year, which include the first tranche of a ?500m cost savings programme to run through to 2015.
Shares were up 2.75 per cent to 43.48 in morning trading on the Amsterdam exchange, their highest level since the financial crisis in 2008.
Source: FT
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