NETHERLANDS: Heineken FY profit tumbles, beer sales slow

By | 18 February 2009

Dutch brewer Heineken has reported a 74% drop in net profit for 2008, hit by charges relating to lower-than-expected performances across its new beer businesses.

Heineken said today (18 February) that net profit slid to EUR209m (US$263m) for the 12 months of 2008, compared to a reported EUR807m in 2007.

Shares in the brewer rose by 6% this morning, however, after it said that organic profit grew by 11%, ahead of its expectations.

Heineken's full-year revenue rose by 27% during 2008, to EUR14.3bn, representing organic growth of 7.4%. Like-for-like beer volumes rose by around 3.5%, compared with 2007, with the Heineken brand nearly 5% up on the previous year.

The brewer said that net earnings was dragged down by exceptional charges related to under-performing divisions in the UK, Russia and India, as well as a worse-than-expected performance in the 11 new markets entered during the year.

Heineken CEO Jean-Francois Boxmeer said: "The exceptional economic circumstances required us to reduce the value of goodwill in Russia, our investment in India and in our pub portfolios in the UK.

"These non-cash exceptional charges, together with low profit contributions of new businesses and the related financing costs resulted in a substantially lower reported net profit

A cocktail of recession, a pub smoking ban, currency devaluation and rising duty taxes conspired against Heineken in the UK, where it last year acquired Scottish & Newcastle operations after joining with Carlsberg to buy and carve up the brewer. 

In its outlook, Heineken said that more jobs were expected to go in 2009 "due to cost-reduction and efficiency improvement
programmes". It did not offer specific numbers.

The group said that a slowdown across several markets has led it to be "cautious on the development of beer consumption" in 2009.

Operational cost savings and cutting debt will be the major focuses for the year.

Sectors: Beer & cider

Companies: Heineken, Carlsberg

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