NETHERLANDS: Heineken H1 profit up, remains cautious

Heineken has said it expects a mid-single digit profit rise for 2008, following strong revenue growth and a series of cost savings measures in its first half.

Heineken net profit jumped 35% to EUR407m (US$600.4m) for the six months to the end of June, after being damaged by a one-off charge in the same period last year.

Net profit before interest and amortisation dipped 1.5% to EUR540m, although this figure represented a 5% rise on an organic basis, the Dutch brewer announced today (27 August).

It predicted a similar rise in organic profit for the remainder of the year, described as cautious by some analysts, as it continues to battle against sluggish western markets and cost rises.

Beer price rises helped Heineken to increase revenue by 17% to EUR6.4bn in its first half, driven by gains for the Heineken brand and also a near 12% contribution from Scottish & Newcastle, which was bought and carved up by Heineken and Carlsberg during the period.

The brewer said it had eased pressure on profit and margins by achieving EUR84m in cost savings.

It added that input costs had risen 15% per hectolitre for the first half and that this would likely continue in the second six months. In addition to its cost savings programme, Fit2Fight, the brewer said it "will continue to pass on higher input costs to the consumer".

Beer markets in Western Europe remained difficult, Heineken added, due to weakening economic conditions. Volumes were also hampered in France by the introduction of a smoking ban in all cafes and bars from January, it said.