Heineken Reports Global Decrease in Beer Volumes
23 Oct 2013 --- Group beer volume decreased by 2% organically (including the benefit of one additional selling day in the quarter), primarily reflecting weakness in Central & Eastern Europe beer markets. This was partly offset by an improved volume performance in Western Europe. Heineken volume in the international premium segment grew by 1%. Key markets contributing to Heineken brand growth in the quarter were France, Brazil, Spain, Nigeria, China and South Korea.
Group revenue was slightly ahead of the prior year quarter (+0.4%), on an organic basis. Group operating profit (beia), on an organic basis, was slightly lower, reflecting a stable revenue performance and higher phasing of marketing spend in the quarter.
Consolidated revenue increased 4% to €5,179 million, including a positive net consolidation impact of 7% (+€369 million) and an unfavourable foreign currency effect of 3% (-€171million) following the depreciation of a number of key currencies against the euro. Organically, consolidated revenue increased by 0.2%, with a total consolidated volume decline of 3.2% more than offset by a 3.4% increase in revenue per hectolitre (including a positive country mix impact of 1%).
Reported net profit of Heineken N.V. in the quarter was €483 million compared with €568 million in the third quarter of 2012. This includes net exceptional items and amortisation costs of €70 million in the quarter (compared to €38 million in the prior year period).
During the third quarter, weak beer market conditions in Central & Eastern Europe and the delayed economic improvement in key developing markets, led to a lower than expected volume performance. HEINEKEN will support operating profit (beia) with a continued focus on cost efficiencies and revenue management initiatives. Below operating profit, recent unfavourable currency movements impacted on other net finance expenses in the third quarter. Consequently, HEINEKEN now expects full year net profit (beia) to decrease in the low single-digits, on an organic basis (previously 'broadly in line with last year'). The recent strength of the euro against a number of key developing market currencies, is now expected to result in a combined impact of foreign currency translation movements and consolidation changes reducing full year 2013 net profit (beia) by approximately €40 million (based on current spot rates). HEINEKEN reaffirms all other elements of its full year outlook for 2013 as stated in its first half 2013 earnings release dated 21 August 2013.
HEINEKEN continues to make strong progress under the current TCM2 programme. In response to the ongoing challenging trading environment in Europe, HEINEKEN is further intensifying efforts to optimise its cost structure in Europe, including Heineken N.V. head office functions. In the second half of 2013, HEINEKEN will incur pre-tax exceptional costs of approximately €70 million related to rightsizing and other restructuring activities across Europe. Of this amount, €16 million is non-cash related. These activities are expected to generate recurring annualised benefits from 2014 onwards and form part of the additional €100 million of cost savings (previously announced in August 2013) under the current TCM2 programme ending 2014.
