Focus - Heineken facing year of transition

Heineken will focus on integrating the FEMSA Cerveza business and realising savings from its global costs programme in 2010, according to its chief financial officer.

Group beer volumes will remain under pressure in 2010, Rene Hooft Graafland told analysts at Heineken's first quarter trading conference today (21 April).

"The picture that we see this year is not too much different from what we saw last year," Heineken's CFO said.

The brewer would continue its focus on the three-year Total Cost Management (TCM) programme and will also work to integrate the FEMSA Cerveza business in Mexico, he said.

The firm aims to reduce net debt to EBITDA ratio to below 2.5 by the end of 2010.

Despite the inward focus and ongoing weakness in European beer markets, Hooft Graafland reiterated Heineken's plan to return advertising and promotion spend to 2008 levels.

Heineken today reported like-for-like beer volumes for the three months to the end of March down by 5% on the same period of 2009, to 23.5m hectolitres. Net sales in value terms fell by 3.5% to EUR2.9bn (US$3.9bn).

Analsyts remain confident that Heineken's investment in FEMSA Cerveza will reap dividends.

Sanford C Bernstein analyst Trevor Stirling said: "Net-net, these results are broadly in-line with our expectations.

"The investment thesis for Heineken is built on savings from TCM, upside from FEMSA and falling raw material (albeit offset by higher energy and A&P expenditure) and this seems to be intact."