Heineken: beer and cider down in UK

By Ewan Turney , 24-Aug-2011

Related topics: Company & City News

Heineken: solid performance overall

Heineken: solid performance overall

Heineken has reported single digit volume decreases in both its beer and cider volumes in the UK for the first half of 2011.

 

The international brewer reported an overall low single digit decline in beer volume across its brands in the UK and a high single-digit decline in cider volumes following the delisting of Strongbow Black on social responsibility grounds, increased competition and a tough comparable last year with the football World Cup.

 

However, its core premium brand Heineken is performing well with a 15% volume uplift on last year. Earnings Before Interest and Tax grew in the UK market driven by the benefit of cost savings from current and prior year operational efficiencies.

 

"I am pleased with our continued positive progress in the UK, despite a challenging economic and consumer environment, particularly the performance of our premium brands, and especially the 15% year on year growth in Heineken sales volumes," said Heineken UK managing director Stefan Orlowski.

 

"Our key brands are benefiting from increased investment, providing a solid platform for us to work with our trade customers in both the beer and cider categories.

 

"The successful launches of Foster's Gold and Bulmers.Nº17, should put us in a position to maintain this positive momentum into the second half of the year, although we expect to remain in a trading environment of low consumer confidence and elevated inflation for the foreseeable future.

 

Orlowski said that Scottish & Newcastle Pub Company (S&NPC) had successfully exited "a number of unprofitable contracts and simplified the business structure" to focus on a high quality estate of around 1,300 pubs.

 

Challenging

 

In Western Europe group beer volumes grew 1% over the first half, benefiting from good weather and higher volumes in the off-trade led by growth in France, Italy and Ireland but partly off-set by lower volumes in the UK and Netherlands.

 

The Heineken brand grew 5.3% in Western Europe driven by strong performance in France, UK and Portugal.

 

It expects volume development in parts of Europe and the USA to remain "challenging" given the current uncertainty, high unemployment and ongoing weak consumer confidence.

 

On a global basis, organic net income for 2011 is expected to be "broadly in line" with last year's €1.45bn. Group beer volume rose 4.2% with revenue up 3.3% on an organic basis driven by a positive volume effect of 2.2% and sales mix of 1.1%.

 

EBIT grew 3.9% due to a number of cost savings, higher profit from joint ventures which was partly off-set by higher marketing investment and increased input costs.

 

Net profit was €694m — up 5.7% on an organic basis — with reported net profit down 14% reflecting an "exceptional gain" last year. It will pay an interim dividend of €0.30 per share, an increase of 15% —an increase of 15% on last year.

 

Solid performance

 

Jean-François van Boxmeer, chairman of the executive board and CEO, said: "This is a solid performance for the first half of the year, with higher organic group beer volume across all regions. Our focus on transforming our geographic footprint, aligned with increased marketing investment has enabled us to deliver robust top-line growth and gains in market share."

 

He added: "We will continue our relentless focus on tight cost management, realisation of planned synergies from earlier acquisitions and strong cash flow generation to support near-term performance.

 

"Whilst mindful of the continuing volatility and increased uncertainties in the global economy, I remain confident that these efforts combined with our strengthened global platform and higher marketing investments, position the company well to deliver sustainable growth over the long-term."

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