NETHERLANDS: Heineken FY profit tumbles, beer sales slow
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.
A shift in demand for premium beers in western markets and a cautious second-half outlook has taken some of the shine off a strong first half performance from Anheuser-Busch InBev, writes Michelle Rus...
SABMiller CEO Graham Mackay has reiterated that the group is interested in acquisitions, but the brewer has not been as inactive in the last 18 months as some may suppose....
Analysts have hailed Carlsberg's half-year results as "positive" and "strong", thanks to margin expansion in the group's key Russian market. Michelle Russell examines reaction to the brewer's performa...
Russia's Brewers' Union has warned the country's Government against a sharp excise tax rise on beer, as the industry ups the pressure on politicians ahead of debate on the 2010 Budget....
A change in supplier payment terms earlier this year helped to boost Carlsberg's cash flow in the first half of 2009, but has drawn criticism in the UK....
The president and CEO of Heineken USA, Don Blaustein, is to step down following a "difference of opinion" on company strategy....
Carlsberg is trialling a new drink aimed at women in the UK....
The top ten stories published on just-drinks this week:...
- The dangers of squaring up to your competitor
- Whatever happened to binge Britain? - comment
- Constellation and Ballast Point's "sticker shock"
- The US beer market - A level playing field for all
- Remy Cointreau's Q2 and H1 - preview
- Diageo Australia appoints commercial head
- Sidney Frank CEO to head Clooney's import co
- A-B InBev to "kick the tyres" at Coca-Cola
- Irish whiskey brands could fail without bulk
- Diageo sells off United Spirits' Bouvet Ladubay
- Global sparkling wine insights - market forecasts, product innovation and consumer trends research
- Future growth opportunities for global spirits
- Global Wine Market to 2019 - Market Size, Development, and Forecasts
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- Global Wine Market: News and Events September 2015