NETHERLANDS: Cost savings boost Heineken H1 profits
- Cost controls, one-off gains spike profits
- Like-for-like beer sales drop
- Expects more savings in H2
Heineken cheers profits rise
Heineken has reported a strong rise in half-year profits as cost controls across its business offset weak beer sales in Europe and North America.
Heineken said today (25 August) that net profits before one-off gains rose by 29% for the six months to the end of June, to EUR621m (US$786.8m). After exceptional gains, including proceeds from the sale of WaverleyTBS in the UK, net profits leapt by 42% on the first half of 2009.
Earnings before interest and tax rose by 14% on the first half of 2009, to EUR1.13bn.
Cost controls helped the brewer to offset ongoing weak demand for beer in key European markets. Favourable exchange rates helped Heineken to increase net sales by 5% for the half-year, to EUR7.5bn, but this represented a 2% drop on a like-for-like basis.
Beer sales by volume fell by 4% on a like-for-like basis, with growing demand in Latin America, Africa and Asia not enough to outweigh the depressed consumer environment across Europe. Volume sales of the Heineken brand rose by 4% for the six months.
"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," said Heineken's chairman and CEO, Jean-François van Boxmeer. "Furthermore, we delivered an incremental EUR104m of cost savings through our Total Cost Management programme.
"Our focus on cash flow has strengthened our balance sheet and our key brands are benefitting from our increased marketing investments," he added.
Heineken said that it expects to achieve further cost savings in the second half of the year, although demand for beer in Europe and North America is likely to remain weak. The group added that the integration of FEMSA Cerveza, which it acquired during the half-year, was on-track.
For the full announcement, click here.
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