Despite a solid first half performance, Heineken has cautioned that profit for the full year will be flat. Heineken achieved organic growth in group beer volume of 4.2% to 104.1m hectolitres with higher volume across all regions in the first half of 2011. On an organic basis, revenue grew 3.3% to Eur8.36 billion, driven by a positive volume effect of 2.2% and increased price and sales mix of 1.1%.
Organically, EBIT (beia) rose 3.9% to Eur1.26 billion, as an increase in revenues, cost savings and higher profit from joint ventures was partially offset by planned higher marketing investment and increased input costs. Reported net profit declined 14%, primarily reflecting a significant exceptional gain last year.
Heineken’s Total Cost Management (TCM) programme delivered Eur82 million of pre-tax savings in the first half 2011 and is expected to yield further cost savings in the second half. With a culture of continuous improvement now firmly embedded across its business, Heineken plans to introduce a new 3-year cost saving programme from the beginning of 2012.
“This is a solid performance for the first half of the year, with higher organic group beer volume across all regions. Our focus on transforming our geographic footprint, aligned with increased marketing investment has enabled us to deliver robust top-line growth and gains in market share,” comments Jean-Francois van Boxmeer, chief executive of Heineken. “Continuing to invest in our key brands is helping us to win with consumers.”
Looking ahead, Heineken expects trading conditions in Latin America, Sub-Saharan Africa and Asia Pacific to benefit from a continued positive economic environment. However, volume development in parts of Europe and the US will remain challenging given the current economic uncertainty, high unemployment and ongoing weak consumer confidence.
Heineken anticipates a slightly higher rate of input cost inflation in the second half of the year but will continue its focus on long-term brand building through higher marketing investment.
Heineken has witnessed volume weakness in the high-selling season of July and early August 2011, reflecting poor weather conditions in Europe, in combination with lower consumer confidence in some key markets. This will affect second half 2011 volume and profit performance and therefore Heineken expects full year net profit (beia), on an organic basis, to be broadly in line with last year.
Jean-Francois van Boxmeer adds: “We will continue our relentless focus on tight cost management, realisation of planned synergies from earlier acquisitions and strong cash flow generation to support near-term performance. Whilst mindful of the continuing volatility and increased uncertainties in the global economy, I remain confident that these efforts combined with our strengthened global platform and higher marketing investments, position the company well to deliver sustainable growth over the long-term.”