Heineken N.V. Reports Organic Net Profit Growth of 5.3% for H1

Heineken has hedging in place for 100% of its 2008 raw material and packaging needs, for 50% of the total 2009 requirements, and expects for 2009 a price increase of approximately 8% compared to 2008.

27/08/08 Heineken N.V. has reported organic net profit growth of 5.3% in the first half, driven by higher pricing across most markets, increased volumes and cost reduction. Net profit (beia) was slightly lower at EUR 540 million, due to a negative currency effect and higher interest charges related to the financing of acquisitions. Revenue growth of 17.1% to EUR 6,411m, of which 6.7% was organic was reported.  Meanwhile there was consolidated beer volume growth of +15.0% to 58.6 million hectolitres. First time consolidation accounted for 9.6% of the growth, and 5.4% was organic, driven by strong performances in Africa, Central and Eastern Europe and Asia Pacific. Volume in Western Europe and the USA was lower as markets were affected by weakening economies.

Jean-François van Boxmeer, Chairman of the Executive Board and CEO, commented: “This is a good first half performance, demonstrating our competitiveness against a background of weaker economies and increased input costs. 

“We have maintained the momentum of our topline growth and again ensured that the Heineken brand outperforms the market and increases its share of the international premium segment.  “Through continued delivery of our Fit2Fight targets, rigorous cost management is now an established part of our operational approach.  The combination of this with our programme of price increases has resulted in an organic EBIT growth of 7.5%.

”The integration of the Scottish & Newcastle businesses into Heineken is proceeding swiftly.  We have identified an additional GBP 25 million of synergies and we have the people, brands and ideas that will allow us to fully exploit our leadership of the highly profitable European beer market.  “In the second half, we will continue to drive and benefit from premiumisation, cost reduction and our stronger, more competitive global position."

Heineken forecasts at least mid-single digit organic net profit growth for the full year of 2008.

Heineken expects the volume trends of the first half to continue in the second half of 2008. Heineken will continue to pass on higher input costs to the consumer.
 
The Heineken brand is well positioned to exploit the positive trend for international premium brands, and the growth of our top-of-mainstream brands will add to our margin and profit growth as well.

In the first half of 2008, input costs increased 15% in price per hectolitre. In line with earlier forecasts, the full year price increase is expected to remain at that level. Heineken has hedging in place for 100% of its 2008 raw material and packaging needs, for 50% of the total 2009 requirements, and expects for 2009 a price increase of approximately 8% compared to 2008. 

Total gross cost reductions in relation to the F2F programme reached 86% of the total EUR 450 million target. The remaining EUR 60 million will be realised in the second half of 2008. Exceptional charges related to F2F in the second half of the year are estimated at EUR 40 million.

The estimated 2008 capital expenditures related to property, plant and equipment, including the investments in newly acquired businesses is forecasted at EUR 1.2 billion.