EUR531 million improvement in Free Operating Cash Flow
Amsterdam, 26 August 2009 - Heineken N.V. today announced:
-
Strong organic net profit (beia) growth of 12%, despite lower volumes, driven by robust pricing and cost reductions. Net profit (beia) amounted to EUR483 million, diluted by financing costs related to acquisitions;
-
Net profit 20% higher at EUR489 million due to organic growth and an exceptional gain on the purchase of Globe notes and bank debt;
-
Organic EBIT (beia) growth of 13% to EUR993 million;
-
UK performance encouraging driven by market share gains, sound pricing and cost reductions;
-
EUR50 million of cost savings from Total Cost Management programme; equates to annualised savings of EUR120 million;
-
Free Operating Cash Flow of EUR383 million, EUR531 million more than prior year; net debt/EBITDA (beia) ratio improved to 3.1x (year-end 2008: 3.3x)
-
Heineken® volume in the international premium segment outperformed overall portfolio;
-
Heineken expects organic net profit (beia) growth for the full year of 2009 to be at least high single-digit;
-
Interim dividend of EUR0.25 per share.
| Key figures |
2009 HY |
2008 HY |
Change |
Organic growth |
| |
(mhl) |
(mhl) |
|
|
| Group beer volume |
78.0 |
76.0 |
2.7% |
-5.6% |
| Consolidated beer volume |
60.8 |
58.6 |
3.8% |
-6.6% |
| Heineken® premium volume |
12.3 |
12.9 |
|
-4.7% |
| |
|
|
|
|
| |
(EUR m) |
(EUR m) |
|
|
| Revenue |
7,147 |
6,411 |
11% |
-0.4% |
| EBIT |
925 |
772 |
20% |
|
| EBIT (beia) |
993 |
925 |
7.4% |
13% |
| Net profit |
489 |
407 |
20% |
|
| Net profit (beia) |
483 |
540 |
-10% |
12% |
| Free Operating Cash Flow |
383 |
(148) |
|
|
| |
|
|
|
|
| |
(EUR) |
(EUR) |
|
|
| Diluted EPS |
1.00 |
0.83 |
20% |
|
| Diluted EPS (beia) |
0.99 |
1.10 |
-10% |
|
CEO Statement
Jean-François van Boxmeer, Chairman of the Executive Board and CEO, commented:
“This has been a strong first half performance, confirming that our value strategy is delivering results. The strength of our brand portfolio has enabled us to support our margins, achieving a stable top line performance despite lower volumes.
Our rigorous Total Cost Management programme is delivering early results, with annualised savings of EUR120 million achieved. We see substantial opportunity to drive down our cost base in the second half of the year and beyond. Focused actions by our management teams to improve profitability, reduce capital expenditure and control working capital has improved our free operating cash flow by more than EUR500 million.
We continue to prioritise investments where we see opportunity to grow the value of our operations. This is demonstrated by double-digit revenue and EBIT (beia) growth in our African region and the organic profit growth in Western Europe. We have maintained the price positioning of our brands with the Heineken® brand outperforming the overall portfolio.
The integration of Scottish & Newcastle and our other newly acquired businesses is now completed. There are clear signs that our specific plans to improve profitability in each of these businesses and to strengthen our long-term market position in the UK are bearing fruit.
The economic and trading conditions remain difficult, and there will be continued pressure on volumes in the second half of 2009. However, our focus on brand building, prioritised investment and rigorous cost reduction will continue to deliver value in the second half of the year.”
2009 full-year profit outlook
Heineken remains cautious on the development of global beer consumption and expects year-on-year volume declines in many markets in the second half of 2009 as a result of rising unemployment and lower disposable incomes. However, Heineken expects the rate of decline to ease towards the end of 2009 due to less demanding comparisons.
The Africa and Middle East region is expected to continue to perform well albeit at a lower growth rate than in the first half of the year.
Heineken will continue its focus on brand building, cash flow generation, debt reduction, cost reduction, and improving the performance of newly acquired companies. The company will maintain the price position of its key brands. All main brands will be supported by the appropriate level of marketing investments.
Better pricing will continue to have a positive effect, although the impact will be less than in the first half of 2009. In markets with high inflation or margin deterioration, the company will aim to maintain its pricing position in the second half of the year.
For the second half, Heineken expects the negative currency impact on results, especially of the US dollar, Nigerian naira and Polish zloty, to be larger.
The Total Cost Management programme will continue to deliver cost savings in the second half of the year, which will help to drive margins.
As a result of the above, Heineken expects organic net profit (beia) growth for the full year of 2009 to be at least high single-digit.
Heineken is fully committed to debt reduction and is targeting a Net debt/EBITDA (beia) ratio of 2.5. Heineken is vigorously pursuing further initiatives to improve the cash conversion ratio to more than 100% in the period 2009-2011.
For 2009 capital expenditures related to property, plant and equipment, including the investments in newly acquired businesses, remain forecast at EUR700 million.
Interim dividend
The Heineken N.V. dividend policy aims at a dividend payout ratio of 30%-35% of Net Profit (beia) and fixes interim dividends at 40% of the total dividend of the previous year. Accordingly, an interim dividend of EUR0.25 per share of EUR1.60 nominal value (Half-year 2008: EUR0.28) will be paid on 2 September 2009. The ex-dividend date for Heineken NV shares is 27 August 2009.
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