Heineken Reports Strong Organic Revenue and Profit Growth
20 Aug 2014 --- Heineken Holding N.V. has reported that group revenue was up +4.6% organically with revenue per hectolitre up 1.5%. Group beer volume +3.1% driven by growth in Africa Middle East, the Americas and Western Europe and an improved performance trend in Q2 in Asia Pacific.
HEINEKEN delivered solid top-line growth in the first half of the year. Whilst the economic outlook remains mixed, HEINEKEN expects positive volume development over the remainder of the year, with an underlying growth rate slightly below the first half of the year. This volume growth will be led by developing markets in the Africa Middle East, Asia Pacific and Americas regions.
HEINEKEN expects revenue per hectolitre growth in the second half of 2014 to moderate versus the first half of the year primarily due to a negative country mix effect. Overall, HEINEKEN expects healthy organic revenue growth for the full year 2014 with an unfavourable impact on reported revenues from foreign currency translational movements.
HEINEKEN targets a year-on-year improvement in operating profit (beia) margin of approximately 40 basis points over the medium term. This will be driven by revenue management initiatives, ongoing cost savings and the anticipated faster growth of higher margin developing markets.
For the full year 2014, margin expansion is expected to be above the medium-term target level.
HEINEKEN still expects a slight increase in marketing & selling (beia) spend as a percentage of revenue in 2014 (2013: 12.6%) and input cost prices to be stable to slightly lower in 2014 (excluding a foreign currency transactional effect).
Consolidated operating profit (beia) growth is expected to moderate in the second half of the year due to slower top-line growth, the phasing of Heineken N.V. head office related and other costs and stronger comparative growth in the second half of 2013.
Exchange rate movements will adversely impact reported revenues and profits in 2014. Assuming spot rates as of 15 August 2014, the calculated negative currency translational impact on consolidated operating profit (beia) is now expected to be approximately €70 million (previously €115 million). At net profit (beia), this effect is now expected to be around €50 million (previously €75 million).
HEINEKEN now forecasts an average interest rate of around 4.0% (versus earlier guidance of 4.1%) (2013: 4.4%) reflecting a lower effective interest rate on outstanding bonds.
HEINEKEN now expects the effective tax rate (beia) for 2014 to be at the high end of the earlier guided range of 28% to 30% (2013: 28.7%).
Improving financial flexibility: HEINEKEN remains focused on driving strong cash flow generation and disciplined working capital management. As previously communicated, HEINEKEN expects to reach its target net debt/EBITDA (beia) ratio of below 2.5 by the end of 2014.
In 2014, capital expenditure related to property, plant and equipment is still forecasted to be approximately €1.5 billion (2013: €1.4 billion). HEINEKEN expects a cash conversion ratio of below 100% in 2014 (2013: 84%).