Heineken Posts Modest Growth as Input Costs Increase
Heineken continues to expect overall group revenues to benefit from continued positive momentum in higher growth economies across the Asia Pacific, Africa & the Middle East and the Americas regions. Volume in Western Europe is expected to remain subdued in the second half of 2012 owing to the challenging economic conditions.
22 Aug 2012 --- Heineken N.V. has delivered solid revenue growth in the first half of 2012. Revenue rose 4.5% organically, driven by higher total consolidated volumes of 1.6% and revenue per hectolitre growth of 2.9%. Group beer volume rose 3.3% with increases in four out of five regions.
Heineken brand volume grew by 6%, once again outperforming the international premium segment and the overall beer market.
EBIT (beia) increased 0.5% reflecting a positive contribution from acquisitions and a favourable currency impact. On an organic basis, EBIT (beia) decreased 5.5%, primarily due to planned capability building investments and higher input costs.
Net profit (beia) increased 1.6% and declined 4% on an organic basis. Reported net profit increased 30% to €783 million, including a post-tax book gain of €131 million for the sale of a minority stake in a brewery in the Dominican Republic.
Diluted EPS (beia) grew 4.3% reflecting higher net profit (beia) and a lower weighted average diluted number of shares following completion of the ASDI share repurchase programme in October 2011.
Heineken continues to expect overall group revenues to benefit from continued positive momentum in higher growth economies across the Asia Pacific, Africa & the Middle East and the Americas regions. Volume in Western Europe is expected to remain subdued in the second half of 2012 owing to the challenging economic conditions.
The Heineken brand is expected to maintain its strong performance in the international premium segment. Heineken will also continue to invest in the expansion of its other global brands - Desperados, Strongbow Gold, Amstel and Sol.
In the first half of 2012, input costs increased by 6.9% on a per hectolitre basis, with this slight increase over earlier full year expectations reflecting the faster growth of countries with higher input cost inflation and a shift towards higher priced one-way packaging. Heineken expects this mix effect to continue into the second half of the year. As a consequence, input costs per hectolitre are now expected to increase by approximately 8% for the full year 2012. Heineken expects to largely offset this increase through a higher rate of revenue per hectolitre growth in the second half of the year.
Jean-François van Boxmeer, Chairman of the Executive Board and CEO, commented: "Our focus on delivering top-line growth continues to be successful with revenue increases across all regions and market share gains in several of our key markets. The Heineken brand again performed strongly in the international premium segment with organic volume growth of 6%.”
“Our Africa & the Middle East, Asia Pacific and Americas regions all delivered an excellent top- and bottom-line performance. The solid growth of the Americas region is particularly noteworthy as it reflects the success of our strategic initiatives in the important USA and Mexican beer markets. Although faced with a challenging economic environment and unfavourable weather, revenue in Western Europe increased slightly in the first half of the year, whereas the Central & Eastern Europe region reported solid organic top-line growth.”
“Our Global Business Services (GBS) organisation and other efficiency initiatives have enabled us to generate €85 million in savings under our Total Cost Management (TCM2) programme. Despite this benefit, our profitability in the first half of the year was impacted by difficult trading conditions across Europe as well as higher input costs and planned capability investments.”
“In the second half, we expect continued top-line momentum to benefit from ongoing high-impact brand marketing as well as capital investments in higher growth markets. Full year net profit (beia) is expected to be broadly in line with last year, on an organic basis.”
Commenting on the proposed acquisition of Asia Pacific Breweries, van Boxmeer said: "The decision by Fraser and Neave on 17 August 2012 to agree to our increased and final offer for its entire shareholding in APB and recommend the proposed transaction to its shareholders marks an important and exciting milestone in our acquisition of APB. The business of APB provides direct access to two of the world’s most exciting growth regions for beer – Southeast Asia & the Pacific Islands, and China. We are working towards a swift completion of the transaction and are looking forward to ongoing growth and success in the region, led by the Heineken and Tiger brands."
