NETHERLANDS: Heineken raises profit goal on strong volume growth
Heineken has raised its forecast for organic net profit growth for the full-year.
The Dutch brewer said today (18 July) that it expects organic net profit growth for 2007 to be in the range of 20-25%. The increase is being driven by strong volume growth in several regions of the world, the company said.
Earlier this year, Heineken said that organic net profit growth for the year was expected to be in the range of 10-13%.
In the first six months of 2007, consolidated beer volumes grew from 53.3m to 58.2m hectolitres, representing a 9.3% hike. Organic growth in consolidated beer volume was 8.3% whilst first-time consolidations contributed 1% to the volume increase, the latter mainly relating to breweries acquired in Vietnam.
Group beer volume in the six-month period totalled 68.1m hectolitres, an 8.5% lift. Total volume growth for the first half represented a slight deceleration from the 10.4% growth in the first four months of this year, reflecting the poor summer so far in Western Europe and softness in the Americas.
The Heineken brand continued to gain share in the international premium segment, growing by 10.8%.
All regions contributed positively to the increase in consolidated beer volume, the company said, with volumes showing particularly strong growth in Central and Eastern Europe, Africa and Southeast Asia.
Strong economies, favourable weather, increased demand for international premium beers and the strength of the brand portfolios were credited as the main growth drivers.
In Western Europe, wet weather in June offset part of the exceptional volume gains achieved in the first four months of 2007. In the US, meanwhile, a 3.5% average price increase and mixed weather held back volume growth of the Dutch brand portfolio. Nevertheless, sales volumes for Heineken Lager continued to grow, while volumes of Heineken Premium Light increased 30%. The company added that Heineken Premium Light continues to develop solidly and offers significant longer term potential, but the 1m hectolitre target for 2007 will be challenging.
Meanwhile, the Fit-to-Fight cost saving programme that will reduce fixed costs by EUR450m by 2008 was described as being "on track". The programme will deliver the forecast gross savings of EUR135 - EUR155m for 2007.
Heineken is set to release its financial results for the first half of this year at the end of next month.
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