Heineken Holding N.V. achieves 17% organic net profit (beia) growth for 2010 half-year

Amsterdam, 25 August 2010 – Heineken Holding N.V. today announced:

• The net result of Heineken Holding N.V.’s participating interest in Heineken N.V. for the first half of 2010 turned out at EUR348 million;
  
  
• Net profit (beia) increased 17% organically, driven by higher EBIT (beia) and lower interest expense and amounted to EUR621 million;
  
  
• Net profit of Heineken N.V. increased 42% to EUR695 million partly due to positive exceptional items;
  
  
• Strong free operating cash flow generation at EUR699 million, up from EUR383 million, positively impacted net debt and interest charges;
  
  
• Organic EBIT (beia) growth of 5.7% as a result of EUR104 million savings from Heineken’s Total Cost Management programme, improved margins per hectolitre and the strong performance of Heineken’s joint ventures, offsetting lower volume and higher marketing investments;
  
  
• Heineken® volume in the international premium segment outperformed the overall portfolio and grew 4.1%;
  
  
• Group beer volume decreased 2.3% organically impacted by the weak economic environment and the effect of excise duty increases, partly offset by strong growth in Africa, Asia and Latin America;
  
  
• Heineken expects the organic increase in net profit (beia) for the full year 2010 to be at least in low double digits;
  
  
• Integration of FEMSA Cerveza makes good progress and is on track;
  
  
• Interim dividend of EUR 0.26 per ordinary share (2009: EUR 0.25).
  
  

Heineken Holding N.V. engages in no activities other than its participating interest in Heineken N.V. and the management and supervision of and provision of services to that company

2010 full-year outlook

For the near term, Heineken remains cautious on the development of beer consumption in Europe and the USA due to continued weak consumer spending and planned austerity measures across many countries. Volume in Latin America, Africa and Asia is expected to continue to grow. Price increases in the first half of the year will continue to have a limited positive effect in the second half of 2010. The international premium segment is forecast to continue to outgrow the beer market as a whole, benefiting Heineken®.

Heineken will continue its focus on brand building and increase investments in key brands, which will be largely offset by lower input costs. The TCM programme will deliver further savings in the second half of the year. In addition, Heineken will focus on developing the performance of companies acquired during the last 3 years, including FEMSA Cerveza, and the unlocking of synergies.

Free operating cash flow generation will remain strong. Heineken remains fully committed to further reducing its net debt, targeting a net debt/EBITDA (beia) ratio of below 2.5 times, and a cash conversion rate in 2010 and 2011 above 100%.
For 2010, capital expenditure related to property, plant and equipment are forecast at EUR800 million, including FEMSA Cerveza for the 8 months commencing 1 May 2010 at EUR200 million.
For the full year 2010, Heineken estimates an effective tax rate (beia), including FEMSA Cerveza and non-recurring items in the normal line of business, of 27-29%. On a like-for-like basis, the effective tax rate (beia) in the second half of 2010 will be higher than the rate of the second half of 2009 when a number of non-recurring items led to a lower tax rate.
For 2010, Heineken expects an average interest rate including FEMSA Cerveza of approximately 6%.
Based on the above, Heineken expects the organic increase in net profit (beia) for the full year of 2010 to be at least in low double digits.

Interim dividend

According to the articles of association of Heineken Holding N.V. both Heineken Holding N.V. and Heineken N.V. pay an identical dividend per share.
The Heineken N.V. dividend policy aims at a dividend payout ratio of 30%-35% of full-year net profit (beia), with interim dividends fixed at 40% of the total dividend per ordinary share of the previous year. Therefore, an interim dividend of EUR 0.26 per ordinary share of EUR1.60 nominal value (half-year 2009: EUR 0.25) will be paid on 3 September 2010. The ex-dividend date for Heineken Holding N.V. ordinary shares is 26 August 2010.

Attachment: Half-year financial report

Heineken Holding N.V. agenda

The presentation for analysts and investors in London will be broadcast live via the website today from 15:00 CET. The presentation can be monitored live via website /webcast/investors, and will be available for download afterwards

Editorial information:

Heineken N.V. is one of the world’s great brewers and is committed to growth and remaining independent. The brand that bears the founder’s family name - Heineken - is available in almost every country on the globe and is the world’s most valuable international premium beer brand. Heineken’s aim is to be a leading brewer in each of the markets in which it operates and to have the world’s most valuable brand portfolio. Heineken N.V. operates 140 breweries in more than 70 countries and sold 165.7 million hectolitres of beer on a 2009 pro-forma basis. Heineken is Europe’s largest brewer and the world’s third largest by volume. Heineken is committed to the responsible marketing and consumption of its more than 200 international premium, regional, local and specialty beers and ciders. These include Amstel, Birra Moretti, Cruzcampo, Dos Equis, Foster’s, Kingfisher, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Strongbow, Tecate, Tiger and Zywiec. On a 2009 pro-forma basis, including FEMSA Cerveza, revenue totaled EUR16.9 billion and EBIT (beia) was EUR2.3 billion.
The average number of people employed is more than 75,000. Heineken N.V. and Heineken Holding N.V. shares are listed on the Amsterdam stock exchange. Prices for the ordinary shares may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on the Reuter Equities 2000 Service under HEIN.AS and HEIO.AS. Most recent information is available on Heineken’s home page: http://www.Heinekeninternational.com.

Disclaimer

This press release contains forward-looking statements with regard to the financial position and results of Heineken’s activities. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Heineken’s ability to control or estimate precisely, such as future market and economic conditions, the behaviour of other market participants, changes in consumer preferences, the ability to successfully integrate acquired businesses and achieve anticipated synergies, costs of raw materials, interest-rate and exchange-rate fluctuations, changes in tax rates, changes in law, pension costs, the actions of government regulators and weather conditions. These and other risk factors are detailed in Heineken’s publicly filed annual reports. You are cautioned not to place undue reliance on these forward-looking statements, which are only relevant as of the date of this press release. Heineken does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of these statements. Market share estimates contained in this press release are based on outside sources, such as specialised research institutes, in combination with management estimates.