Amsterdam, 20 April 2011 - Heineken Holding N.V. today announced its trading update for the first quarter of 2011.
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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.
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.
Financial results
Heineken's revenue increased by 22% 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.
Change in consolidation scope in the first quarter
The main consolidation scope changes having an effect on consolidated volume, revenue and profit include:
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The five breweries of the Sona Group acquired in January 2011 have not yet been consolidated.
2011 Outlook Update
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.
Financial structure
Heineken's Hunt for Cash 2 programme continues to deliver results and is expected to contribute to the further reduction in the overall level of net debt and Net Debt/ EBITDA (beia) ratio in 2011. Heineken reaffirms its earlier expectation for a cash conversion ratio of approximately 100% for the full year 2011.
As of 15 April 2011, Heineken N.V. had purchased a cumulative amount of 13,117,233 shares in the open market and delivered 12,284,841 of these shares to FEMSA in relation to the Allotted Share Delivery Instrument (ASDI). On March 21st, Heineken N.V. announced that it has doubled the maximum value of the third phase of its existing share buyback programme to €300 million, running up to and including 16 June 2011.
Accounting adjustments
On 1 January 2011, Heineken changed its accounting policy with respect to employee benefits, consistent with industry practice and in accordance with the updated standard, IAS 19 Employee Benefits, as published by the International Accounting Standards Board. After the policy change, Heineken recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income.
This change was applied retroactively to the full year 2010, resulting in a €15 million and €11 million positive impact on 'Results from operating activities' and 'Net profit' of Heineken N.V., respectively. The pro-forma adjustment results in a €298 million decline in 'Total Equity' of Heineken N.V. for the full year 2010.
| € million | FY10 reported | Policy change | FY10 adjusted |
| Personnel expenses | -2,680 | 15 | -2,665 |
| Result from operating activities | 2,283 | 15 | 2,298 |
| Income tax expenses | -399 | -4 | -403 |
| Net profit of Heineken N.V. | 1,568 | 11 | 1,579 |
Investor calendar Heineken Holding N.V.
Annual General Meeting of Shareholders: 21 April 2011
Quotation ex-final dividend date 2010: 27 April 2011
Final dividend 2010 payable: 5 May 2011
Half-year 2011 results announcement: 24 August 2011
Trading update for the third quarter 2011: 26 October 2011
Heineken Holding N.V. will host an analyst and investor conference call in relation to this trading update today at 10:00 am CET/ 9:00 am BST. The call will be audio cast live via the website http://www.heinekeninternational.com/webcast/investors. An audio replay service will also be made available after the conference call at the above web address. Analyst and investors can dial-in using the following telephone numbers:
United Kingdom
Local line: 44-20-8515-2302
Toll Free: 0800- 358- 0857
Netherlands
Local line: 31-20-796-5332
Toll Free: 0800-265-8591
Press enquiries
John-Paul Schuirink
Tel: 31-20-5239355
John-Paul.Schuirink@heineken.com
Investor and analyst enquiries
Jan van de Merbel / George Toulantas
Tel: 31-20-5239590
Investors@heineken.com
Editorial information:
Heineken is one of the world's great brewers and is committed to growth and remaining independent. The brand that bears the founder's family name - Heineken - is available in almost every country on the globe and is the world's most valuable international premium beer brand. Heineken's aim is to be a leading brewer in each of the markets in which it operates and to have the world's most valuable brand portfolio. Heineken operates 140 breweries in more than 70 countries and sold 205 million hectolitres of beer on a 2010 pro-forma basis. Heineken is Europe's largest brewer and the world's third largest by volume. Heineken is committed to the responsible marketing and consumption of its more than 200 international premium, regional, local and specialty beers and ciders. These include Amstel, Birra Moretti, Cruzcampo, Dos Equis, Foster's, Kingfisher, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Strongbow, Tecate, Tiger and Zywiec. On a 2010 pro-forma basis, including FEMSA Cerveza, revenue totalled €17 billion and EBIT (beia) was €2.7 billion.
The average number of people employed is more than 70,000. Heineken N.V. and Heineken Holding N.V. shares are listed on the Amsterdam stock exchange. Prices for the ordinary shares may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on the Reuter Equities 2000 Service under HEIN.AS and HEIO.AS. Most recent information is available on the website http://www.heinekeninternational.com.
