Cuts help Heineken beat estimates
Heineken, the world’s third-largest beermaker, posted first-half profit that beat analysts’ estimates as the company closed breweries and cut debt.
Net income rose 42pc to €695m, or €1.31 a share, the Amsterdam-based company said today.
The median estimate of six analysts surveyed by Bloomberg News was €575m. Profit excluding one-time items and acquisitions gained 17pc and Heineken forecast growth for the year “at least in low double digits.”
Savings from a three-year cost reduction program amounted to €104m in the first half as the brewer sought to combat falling volume in Europe and the US.
Heineken said it’s “cautious” on the outlook for beer consumption in developed markets, while expecting continued volume growth in the emerging regions of Latin America, Africa and Asia.
“Organic net profit growth is very strong, and in particular we saw good delivery on the cost savings,” said Trevor Stirling, an analyst at Sanford C. Bernstein in London. “Overall, this is a good set of numbers.”
Heineken rose 49 cents, or 1.4pc, to €35.25 as of 9:27am in Amsterdam trading.
Breweries in the English towns of Reading and Dunston were closed in the period, helping cut costs, Heineken said.
Net interest expenses were reduced to €239m from €264m, mostly due to debt reduction, it said.
First-half sales at the maker of Amstel lager and Strongbow cider rose 5.2pc to €7.52bn. Excluding acquisitions, revenue declined 2pc, Heineken said.
The volume of beer sold, excluding acquisitions, fell 2.3pc, beating the median analyst estimate for a 4.6pc drop.
The decline was led by a 9.4pc slump in central and eastern Europe, which contributed about a fifth of operating income last year.
Heineken attributed the reduced volume to the weak economic environment and increases in beer excise duty, particularly a 200pc increase in Russia.
Volume in western Europe, the company’s biggest profit contributor, fell 2.5pc, as consumers cut spending amid high unemployment and as unfavourable weather crimped demand.
In Africa and the Middle East, volume jumped 7.2pc, the company said, helped by growth in Nigeria and South Africa.
Heineken is working to expand capacity at the Sedibeng brewery, which opened near Johannesburg this year. The brewery is owned by Brandhouse Ltd, the company’s joint venture with Diageo Plc.