FDBusiness.com

Heineken has posted a 1% organic decline in group revenue to Eur10.38 billion for the first half of 2013 as a 3% drop in group total volume was only partly offset by a 2% increase in group revenue per hectolitre.

Group operating profit (beia) at Eur679 million was in line with the prior year on an organic basis. However, reported net profit dropped 17% to Eur639 million. Heineken’s TCM2 programme delivered Eur139 million of pre-tax cost savings in the first half of 2013; and additional cost savings of Eur100 million have been identified.

The decline in group beer volume reflects a combination of unseasonably wet and cold weather conditions and continued weak consumer sentiment in Europe and the US. This was further compounded by a moderation in economic growth in key developing markets and the negative effect of destocking in France following a substantial excise duty increase in January 2013.

Heineken’s developing markets delivered 7% organic operating profit (beia) growth and now comprise half of group operating profit (beia).

Jean-François van Boxmeer, chairman and chief executive of Heineken.

Heineken has a strong innovation pipeline and continues to utilise its portfolio of global and local brands to drive initiatives which can be rolled out across multiple markets. In the first half of 2013, innovation contributed over Eur600 million of revenues. The new ‘Radler’ product varieties (a mix of beer and 100% natural juice) were successfully launched in a further 12 markets, bringing the total number of markets with local ‘Radler’ beers to 24 across three regions. Heineken’s global cider brand, Strongbow Gold, was launched in Mexico in 2013 with encouraging early results.

Jean-François van Boxmeer, chairman and chief executive of Heineken, comments: “We continue to operate in a challenging trading environment. While this has impacted our organic top-line performance, our increased emphasis on higher growth regions is delivering, with organic operating profit in developing markets growing 7%. Our ongoing focus on costs has generated a further Eur139 million of savings in the first half of 2013. Although the volume trends have improved in July with the warm summer weather in Europe, economic conditions in several of our core markets continue to constrain consumer spending. However, we will continue to strengthen our business through sustained brand investment and a focus on delivering value through on-going revenue management and cost saving initiatives.”