Heineken Reports Sales and Volume Growth in Q3

On an organic basis, revenue grew 3.0%, reflecting a positive volume effect of 0.5% (including the impact of country mix) and improved price and sales mix of 2.5%.

Oct 26 2011 --- Heineken has reported that revenue grew 0.6% to €4,645 million in Q3, including a positive first time consolidation impact of €32 million, or 0.7%, mainly related to the acquired breweries in Nigeria in January 2011. Foreign currency movements contributed to a negative translational effect on revenues of 3.1% in the quarter. This primarily reflects devaluation of the Nigerian naira, Polish zloty, British pound and Mexican peso versus the euro reporting currency. On an organic basis, revenue grew 3.0%, reflecting a positive volume effect of 0.5% (including the impact of country mix) and improved price and sales mix of 2.5%.

On an organic basis, EBIT (beia) was lower in the quarter. While revenues increased and ongoing TCM cost savings were realised, the effect of poor weather in July and early August resulted in negative operational leverage in Europe. In addition, higher planned marketing spend, upfront capability building investments in Commerce and Business Services and a low single-digit increase in input costs per hectolitre reduced profit. In the quarter, a slight positive consolidation scope impact was more than offset by an adverse translational effect from foreign currency movements.

HEINEKEN's share of net profit of associates and joint ventures grew substantially, driven by strong performances of the Asia Pacific Breweries and South African joint venture operations.There were no exceptional costs in the quarter. Reported net profit in the quarter was €525 million, broadly in line with the prior year.

HEINEKEN has confirmed its earlier outlook for net profit (beia) to be broadly in line with last year, on an organic basis. The Company reaffirms its previous cost synergy target, related to the acquisition of FEMSA Cerveza, of €150 million by the end of 2013. The Company reiterates its estimate of an average interest rate of around 5.5% and does not expect material changes to the effective tax rate (beia) in 2011 (2010: 27.3%).

In the third quarter, total consolidated volume grew by 1.1% on an organic basis, with growth in consolidated beer volume (+2.2%) partly offset by lower volumes in wholesale operations and soft drinks. Volume of the cider category was broadly in line with the prior year.

Group beer volume grew 2.3% on an organic basis, with volume gains across four of the five regions.

In Western Europe, group beer volume decreased 1.7% organically. This primarily reflects the impact of unusually poor weather in July and early August across large parts of the region and ongoing economic uncertainty. However, group beer volumes showed a solid improvement in the latter part of the quarter as weather conditions became favourable. In the quarter, volume was lower in the United Kingdom, France, Netherlands and Spain, while volume in Italy grew in the low-single-digits.

In Central & Eastern Europe, group beer volume grew 4.9%, on an organic basis, driven by a strong volume rebound in Russia. Volume also increased in other key markets including Austria, Hungary and Romania, whilst volume declined in Poland and Greece. In the latter market, the effect of government austerity measures continues to impede consumer demand, leading to a high single-digit decline in volume in the quarter.

In Africa & the Middle East, group beer volume was up 6%, on an organic basis, led by high single-digit growth in Nigeria, Rwanda and our joint venture in the Republic of Congo. Volume of our South African joint venture grew in the mid single-digits, while volume in the Democratic Republic of Congo grew in the low single-digits. Volume in Egypt declined by high single-digits, reflecting a slower pace of volume decline compared with the first half of 2011. Heineken completed the transfer of three breweries acquired from the Sona Group to Nigerian Breweries in early October. The two breweries acquired in Ethiopia in August 2011 will be consolidated in the fourth quarter of 2011.

The Americas achieved organic group beer volume growth of 0.9% driven by higher volume in Brazil, the Caribbean region and the CCU joint venture in Chile and Argentina.
Depletions in the USA declined at a slightly slower rate versus the first half of 2011 with improving trends for the Heineken brand and continuing strong double-digit growth of Dos Equis. Volume in Mexico was in line with the prior year period. The successful implementation of the commercial strategy and realisation of planned cost synergies in Mexico continues to support positive revenue and profit momentum in the country.

In Asia Pacific, group beer volume increased 3.8% organically, led by mid single-digit growth at our Asia Pacific Breweries joint venture, primarily driven by a continued strong performance in Vietnam. The Taiwanese and South Korean export markets grew strongly, while volume of the United Breweries joint venture in India grew moderately following strong comparative growth in the prior year quarter.