Packaging
Heineken N.V. reports organic net profit growth of 5.3% for the first half of 2008
Wednesday 27. August 2008 - Heineken N.V. today announced its results for the first six months of 2008
Heineken N.V. today announced its results for the first six months of 2008[1]:
* Organic net profit growth of 5.3%, 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.
* Organic EBIT (beia) growth of 7.5%. EBIT (beia) increased to EUR 925m.
* Revenue growth of 17.1% to EUR 6,411m, of which 6.7% was organic.
* 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.
* Heineken brand growth of 5.8% in the international premium segment to 12.9 million hectolitres, gaining share.
* Additional gross cost savings of EUR 84 million related to the F2F cost reduction programme. Improvement in the fixed cost ratio to 29.6% from 31.5% for the half year of 2007.
* Expected organic net profit growth of at least mid-single digit for the full year 2008.
* Heineken N.V. will pay an increased interim dividend of EUR 0.28 per share on 3 September 2008 (2007: EUR 0.24).
* Heineken has completed the S&N acquisition, integration of new businesses is proceeding rapidly.
* Heineken half-year statements include the first-time consolidation of S&N as of 1st May 2008. In addition, from January 2008, Heineken has decided to adopt the equity accounting method for joint ventures, replacing the proportional consolidation method.
Key figures (2007 restated for equity method of joint venture accounting)
see http://www.heinekeninternational.com
CEO Statement
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.”
2008 full-year profit outlook
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.
Interim dividend
The Heineken N.V. dividend policy aims to achieve a dividend payout ratio of 30%-35% of Net Profit (beia) and the interim dividend is fixed at 40% of the total dividend of the previous year. Accordingly, an interim dividend of EUR 0.28 per share of EUR 1.60 nominal value will be paid on 3 September 2008. The ex-dividend date for Heineken NV shares is 28 August 2008.