Washington Post: Heineken says 2011 Profit Fell 1.4% Despite Revenue Rise, Plans Cost Cuts
The Washington Post:
Heineken NV, Europe’s largest brewer by sales, reported a fall in profits in 2011 due to rising costs, though a thirst for its beer in developing markets kept revenues buoyant.
The company said Wednesday that net profit over the year fell 1.4 percent to €1.43 billion ($1.88 billion), from €1.45 billion in 2010, hit by restructuring costs, higher commodity and labor costs, and higher taxes.
Revenues grew 6.2 percent, boosted by the acquisition in April 2010 of Mexican brands including Sol, Dos Equis and Tecate.
Heineken said revenues grew 3.6 percent excluding the impact of acquisitions, as increases in Eastern Europe, Africa and Asia offset stagnation in Western Europe, where British consumers in particular avoided the company’s Strongbow cider.
Heineken also owns the Newcastle, Amstel, and Birra Moretti brands, among others. Volume increases accounted for 2.1 percent of the revenue rise while prices hikes made up the balance.
Analysts said the company’s earnings were better than expected and shares rose 4.6 percent to €38.23 in Amsterdam trading. Shares are down 12 percent since May 2011.
“Earnings in Western Europe have been supported by cost savings,” said analyst Richard Withagen of SNS Security, who rates shares a Hold. He noted that the company’s performance was better than it had itself indicated after the first half.
Heineken said operating profit would have risen 2.8 percent to €2.70 billion under its preferred measure, which ignores “exceptional” costs and gains, including the costs of its ongoing restructuring programs, as well as the cost of writing down the value of acquisitions for which it paid more than book value. Heineken said net exceptional operating costs were €110 million greater in 2011 than in 2010.
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