Heineken 2009 profit rises to US$1.39b
AMSTERDAM, Netherlands – THE Dutch brewer Heineken NV said yesterday full year 2009 profit rose fivefold as it was able to cut costs and raise beer prices despite the global economic downturn. The company also took fewer one-time write-offs and cut advertising costs.
Full-year net profit at the world’s third largest brewer was euro1.02 billion (US$1.39 billion), up sharply from euro209 million in 2008, when it had to write euro475 million off of the value of its operations in Russia and India.
Heineken also benefited from a one-time book gain of euro215 million in 2009 as it bought back debt at a troubled subsidiary at below face value.
Sales rose 2.8 per cent to euro14.7 billion, boosted by Heineken’s consolidation of Scottish & Newcastle, the British brewer it bought for euro14.3 billion in May 2008.
Heineken hiked its prices in 2009, even as beer drinkers were cutting back consumption.
“Strong pricing delivered stable revenues that compensated for lower volumes,” CEO Jean-Francois van Boxmeer said.
Volumes fell in most regions. Heineken noted that the US suffered particularly during the downturn, with beer drinkers preferring cheaper brands and consumption of imported beers falling around 10
per cent.
However, price increases and lower advertising costs helped preserve earnings. Companywide, earnings benefited from cost savings as Heineken was able to close some breweries while combining operations with Scottish & Newcastle.
Heineken does not publish quarterly figures.
Van Boxmeer said that “organic growth” in net profit was 18 per cent, while “organic” sales growth was flat. These are non-standard measures that strip out the effects of acquisitions
and write-downs.
“Heineken’s earnings came in slightly below our estimates, but in line with consensus,” said analyst Richard Withagen of SNS Securities in a note on the earnings. He added that earnings appeared “driven by cost savings” and repeated a “Hold” rating on shares.
Shares rose 2.7 per cent to euro35.995 in early trading.
Van Boxmeer said Heineken expected beer drinkers to show a preference for cheaper brands in 2010, and Heineken planned more advertising
to compensate.
The company said it expects its latest purchase, the US$7.6-billion acquisition of Dos Equis brewer Femsa, to close in the second quarter.
