Heineken writes down £45m off pub estate
Heineken has written down around £45m (€51m) off the value of its 2,000-strong pub estate in Britain due to "exceptional economic circumstances".
The Dutch brewer, which acquired around 2,000 pubs as part of its takeover of Scottish & Newcastle last year, said the UK beer market had experienced an "exceptionally challenging year" due to the two duty rises — amounting to a 17% increase — the smoking ban and the worsening economic climate.
The decrease roughly amounts to an average £22,500 drop in value per pub.
The problems had been exacerbated by the steep drop of the British pound against the Euro (-21%), which led to a lower than expected revenue from Scottish & Newcastle UK.
Its key mainstream beer brand Foster's saw volumes fall 10% on last year, while Kronenbourg and John Smith's performed "in line with the market" — UK on-trade volumes were down 9.5% as a whole and up 0.5% in the off-trade.
The Heineken brand itself saw a 24% increase in volumes to over 500,000 hectolitres and cider volumes grew 6.5% driven by a strong performance from Bulmer's.
Overall, Heineken reported a huge 74% decrease in net profit from €807m to €209m, an 11% increase in operating profit, while earnings before interest and tax rose to €1.93bn.
"In particular, the performance in the UK was below expectations as the combination of recession, on-trade downturn, unprecedented excise duty rises, the smoking ban and the fall in the value of the British pound made the market exceptionally challenging," said chairman Jean-Francois van Boxmeer.
"We are realising the announced synergies. In addition, we are reducing costs more significantly, restructuring parts of the business, investing in brands and improving pricing in order to increase profitability."
