Dutch brewer Heineken said today that it had posted a strong result for 2003, despite a combination of adverse external effects. However, it warned that it would be hit by exchange rates over the next couple of years.

Net profit (excluding extraordinary items and amortisation of goodwill) rose 1.4% from €795m to €806m, in line with the forecast given by Heineken in September 2003.

However, organic net profit growth, excluding exchange effects, acquisition effects, extraordinary items and amortisation of goodwill, amounted to 7%.

Exchange rate movements had the effect of lowering the operating result by €88m, €42m of this being due to the weak dollar.

Sales of the Heineken brand in the more lucrative premium segment rose by 6.1% to 18.5 million hl.
Results in Europe were good, helped not only by the good summer, but also by the focus on improving the sales mix and strong sales growth in Spain, Italy and Poland, the company said.

Although the US market was disappointing, Heineken's market share increased, as new packaging was successfully introduced and the distribution network was further expanded.

Executive board chairman, Thony Ruys, said: "Today's results, achieved despite adverse exchange effects and a weak economy, demonstrate once again Heineken's worldwide strength and potential. The acquisition of BBAG represents a major advance in our business development and the strategic investment in China is another good example of the consistent implementation of our acquisition strategy. Although the strong euro will impact on our future profits, I am confident that Heineken will sustain its organic growth and further reinforce its competitive positions."

The company said that barring unforeseen circumstances, it expects to achieve further organic profit growth in 2004.

However, it warned that at the current exchange rates for the dollar and other currencies against the euro relative to the basis on which hedging contracts have been entered into, Heineken's net profit will again be severely affected by currency movements.

"These effects will outweigh the predicted organic profit growth and the contributions to earnings in 2004 by our new acquisitions. Even if the exchange rates stay the same, the weaker dollar will still have a marked impact on our results in 2005."

Group volume rose by 14.2 million hl to 99.0 million hl in 2003, growing at 17%. Organic sales growth accounted for three percentage points and new acquisitions such as BBAG for 14 percentage points. Rapid organic growth in sales volume was reported in Nigeria, Spain, Russia, Poland, the Far East and Italy, but this was offset by lower sales in France, Greece and the Netherlands, largely as a result of difficult market conditions.