FDBusiness.com

Global brewer Heineken has produced a strong first half performance but remains cautious on the development of beer consumption in Europe and the US due to continued weak consumer spending and planned austerity measures across many countries. Heineken reported a 42% jump in net profit to Eur695 million, partly due to positive exceptional items, on revenue up by 5.2% to Eur7.52b but down organically by 2% for the first half of 2010 as group beer volume declined by 2.3% organically, impacted by the weak economic environment and the effect of excise duty increases, partly offset by strong growth in Africa, Asia and Latin America.

Heineken’s organic net profit (beia) increased 17% to Eur621m, driven by higher EBIT (beia) and lower interest costs. The Dutch brewer’s Total Cost Management programme delivered savings of Eur104m during the first half.

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

“Heineken achieved strong organic net profit growth in the first half year 2010. Trading conditions remained challenging in Europe and the USA, but we realised strong group beer volume growth in Africa and Asia. The effectiveness of our premium strategy was reinforced by the continued strong performance of the Heineken brand which once again outperformed our broader portfolio and the overall beer market,” comments Jean-François van Boxmeer, chairman and chief executive of Heineken.

In the second half of 2010, Heineken will continue its focus on brand building and increase investments in key brands, which will be largely offset by lower input costs. The TCM programme will deliver further savings in the second half of the year. In addition, Heineken will focus on developing the performance of companies acquired during the last three years, including South American brewer FEMSA Cerveza, and the unlocking of synergies.

“We are well placed for the future. Our expanded footprint in Latin America complements our strong positions in Africa and Asia where we continue to see excellent opportunities for future volume growth. Our focus on cash flow has strengthened our balance sheet and our key brands are benefiting from our increased marketing investments,” he adds.

The recently completed acquisition of FEMSA Cerveza, which is expected to yield annual cost synergies of Eur150m by 2013, consolidates Heineken’s position as the world’s second largest brewer by revenues and third largest by volume, and expands its exposure to developing beer markets. In addition, it creates a platform for future value growth in three of the four largest beer profit pools in the world.

Heineken expects the organic increase in net profit (beia) for the full year 2010 to be at least in low double digits.