Heineken cheers 2017 profits, but margin growth to lose fizz

Wednesday, February 14, 2018

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LA HAYE, Netherlands (AFP) — Dutch brewing giant Heineken said Monday that profits jumped by a quarter in 2017, thanks to higher sales of its premium-brand beer across nearly all regions.

Heineken said in a statement that its net profit rose by 25.6 per cent to 1.93 billion euros (US$2.4 billion) last year on a 5.3-per cent increase in sales to 21.9 billion euros.

“We delivered strong results in 2017, with all the regions contributing to organic growth in volume, revenue and operating profit,” Heineken's chief executive Jean-Francois van Boxmeer said.

“The Heineken brand performed very well, and Heineken 0.0 (non-alcoholic beer) was launched in 16 countries,” he said in a statement.

Sales of its premium brand were up 4.5 per cent, “one of the brand's strongest performances in recent years, with positive volume performance across all regions apart from Asia Pacific,” the Amsterdam-based group said.

The brewer was also making inroads in the low-alcohol beer sector, with Heineken 0.0 “delivering ahead of expectations”, with Van Boxmeer telling a teleconference, “We see significant potential in the market.”

But Heineken said its operating profit margin will expand about 25 basis points below the targets set for previous years, mainly because of a headwind, as it integrates a business in Brazil that it bought from rival Kirin for US$666 million, the Bloomberg news agency reported.

Heineken's share price was down by 2.0 per cent in noon trade on the Amsterdam stock exchange's AEX index, recovering from a fall of almost 4.0 per cent shortly after opening.

Founded in the 19th century, Heineken produces and sells more than 250 brands, including Desperados tequila-flavoured beer, Sol, John Smith's, and Strongbow cider, and employs about 80,000 people in 70 countries around the world.

It announced a range of different acquisitions last year, including Punch Taverns in Britain and Brasil Kirin in Brazil, as well as Lagunitas in the US.

Looking ahead, Heineken warned that 2018 will “continue to be marked by volatility and uncertainty” and it warned of a “negative impact from currency compared to 2017... as foreign exchange markets remain very volatile”.

Nevertheless, the brewer said it would propose paying an increased dividend of 1.47 euros per share for 2017, compared with 1.34 euros for 2016.

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