Cost savings, volume growth drive Heineken first-half profit
Heineken, the world's third-largest brewer, on Wednesday reported better-than-expected operating profit in the first half, as it sped up cost savings and grew volumes in all regions except for Central and Eastern Europe.
Heineken, which makes Europe's best-selling Heineken lager as well as Sol, Tiger and Strongbow cider, said it expected growth to slow in the second half, but guided for a margin expansion above its 40 basis points target in 2014.
Heineken had previously guided for its three-year savings plan, TCM2, to hit its €625m target this year. On Wednesday, however, it said it had already realised €637m of savings at the end of the first half.
The group said that it grew market share in Western Europe, and that the soccer World Cup and good weather boosted sales in the first half. Sales of the Heineken brand grew by double digits in France and Spain.
The world's top brewers are relying on emerging markets such as Latin America, Asia and Africa for growth amid subdued consumer spending in slowly recovering Europe and limited U.S. expansion.
The Central and Eastern Europe region was hit by bad weather and floods during the first half, Heineken said. Volumes dropped by low double digits in Russia because of weaker economic growth and consumer confidence.
For the group as a whole, operating profit before one-offs rose 9.6 percent in the first half to 1.454 billion euros ($1.93 billion), above the 1.367 billion expected in a Reuters poll of seven analysts.
Heineken said it would pay an interim dividend of 0.36 euros per share on September 2.
The world's largest brewer, Anheuser-Busch InBev (ABI.BR) said in July it experienced a sharp surge in sales in Brazil during the World Cup with the month-long contest leading to consumption of an extra 140 million litres or 2 million barrels.