Heineken gained nearly 2% on Wednesday morning after its third-quarter revenue surpassed estimates, driven by a strong boost from its premium brands. For the three months ended Sept. 30, the Dutch brewer logged a revenue of 9.07 billion euros, down from the prior year's 9.60 billion euros but significantly above the Visible Alpha-compiled consensus estimate of 7.78 billion euros.
Net revenue, before exceptional items and amortization of acquisition-related intangible assets, grew 3.3% in the quarter and 5.1% year-to-date, supported by strategic pricing measures to counter inflation and double-digit gains for the Heineken brand across 30 markets. The company also saw positive contributions from Kingfisher Ultra in India and Savanna in Southern Africa.
In terms of geographies, the Amsterdam-listed company's beer volume grew organically across Europe and the Africa and Middle East markets in the third quarter, with 1.3% and 1.2% declines in the Americas and Asia Pacific, respectively. Heineken's revenue gains were slightly offset by currency devaluations in several key markets, including Nigeria, Mexico, and Brazil.
Nonetheless, Heineken confirmed its guidance of operating profit before exceptional items and amortization organic growth in the range of 4% to 8%. "We delivered a solid quarter of balanced growth, organically growing beer volume 0.7% and net revenue (beia) 3.3%. Our business continues to deliver in line with our plan in aggregate, despite some markets navigating challenging consumer and industry trends," Chairman Dolf van den Brink commented.
Analysts at RBC Capital Markets welcomed Heineken's latest results but flagged other potential long-term challenges for the company. "Organic revenue growth of 3.3% was in line with company consensus (which has declined by over 200bps in recent weeks) and operating profit growth guidance of 4-8% for the year has been maintained.
This in no way addresses the longer term challenges that we see facing Heineken (need to step up investment at a cost to margins) but is nonetheless very welcome given the volatile nature of Heineken's reporting in recent times," the analyst James Edwardes Jones noted. Price: $78.36, Change: $+1.4, Percent Change: +1.79%.