Heineken Results Boosted by Emerging Markets

20 Apr 2011

The first quarter is seasonally less significant in terms of volume and profit contribution. In 2010, the first quarter represented 19% of consolidated beer volume and considerably less in terms of profit contribution.

4/20/2011 --- Heineken has reported in a Q1 trading update that consolidated beer volume grew 44% to 33.8 million hectolitres, due to the first time consolidation of the beer operations of FEMSA and an organic volume increase of 5.5%. All regions contributed to the organic growth.

Volume of the Heineken brand in the international premium segment grew 5.7%, reaching 6 million hectolitres.

Heineken’s revenue increased 22% reflecting organic growth of 3.6%, the benefit of consolidation scope changes and favourable exchange rate movements.

EBIT (beia) grew by over 20% on an organic basis, driven by higher volume and the realisation of ongoing cost savings.

Organically, net profit (beia) increased substantially due to higher EBIT and lower interest expenses.

Heineken Holding N.V. engages in no activities other than its participating interest in Heineken N.V. and the management and supervision of and provision of services to that company.

Heineken’s revenue increased by 22% in Q1 to €3,591 million. Organically, revenue grew 3.6%, as a result of higher volumes, whilst price and sales mix was stable. The net impact from consolidation scope changes contributed €518 million, with favourable exchange rate movements contributing a further €32 million.

Organically, EBIT (beia) grew by over 20%, reflecting higher volume and the realisation of ongoing TCM cost savings. The marketing spend ratio (marketing expenditure as a percentage of revenues) was lower compared with the prior year quarter. For the full year 2011, Heineken expects the marketing spend ratio to be above last year. Input costs per hectolitre were in line with the comparable prior year period. Net changes in consolidation scope and favourable currency movements increased EBIT (beia) by 24%. Heineken’s share of net profit of associates and joint ventures was substantially higher. Heineken does not expect the organic EBIT (beia) growth achieved in the first quarter to be indicative of its full year performance.

Organically, net profit (beia) increased substantially due to higher EBIT (beia) and lower interest costs. Reported net profit of Heineken N.V. in the quarter was €151 million.

Heineken remains confident in continued positive volume development in Latin America, Africa and Asia. Whilst Heineken is witnessing gradually improving economic conditions in a number of countries in Europe and in the USA, consumers remain cautious with their spending behaviour, particularly in on-trade channels.

Heineken is focusing on increasing value and volume share in its key markets, supported by higher marketing investment and innovation. Heineken targets an expansion of its high margin product portfolio, including the Strongbow Gold cider and Desperados brands. The new global multi-media campaign for the Heineken brand will be launched in 30 markets in the first half of the year, including the key markets of USA, UK, Spain, Greece, Poland and Canada. The higher planned marketing spend in 2011 is expected to affect profit development in the near term, particularly across the European region. However, Heineken expects this investment to support its focus on long-term brand equity building and further strengthen its leadership position in key markets.

Heineken continues to realise synergies from the acquired beer operations of FEMSA and confirms its previously stated cost saving target of €150 million by the end of 2013. As part of Cuauhtémoc Moctezuma’s brand portfolio strategy, the Heineken brand was launched in Mexico from 15 March 2011.

For the full year 2011, Heineken confirms its forecast of a low single digit increase in input costs on a per hectolitre basis.