Heineken 2010 beats expectations, driven by cuts

Heineken 2010 beats expectations, driven by cuts

Brussels: Heineken NV, the world’s third-largest brewer, beat market forecasts for 2010 earnings on Wednesday as cost savings more than offset lower beer sales.

Heineken said it expected drinkers in Latin America, Asia and Africa to buy more of its lagers and other drinks this year and said it would mitigate an expected low single-digit percentage increase in input costs with higher prices.

Investors had been keen to hear the Dutch brewer’s outlook on rocketing raw material costs, likely to be a hot issue in 2011. The futures price for malting barley has risen 51% since the launch of the contract in May last year.

The group, whose chief brands are Heineken and Amstel, Europe’s number one and three beers, said it expected European and US consumers to be cautious this year, with an improving economy but higher unemployment and austerity measures.

It added that the premium beer segment, including its Heineken brand in many markets, would outperform the overall beer market.

Rival SABMiller, with a strong presence in faster- growing African and Latin American markets, said last month its lager volumes rose 3% in the final three months of 2010.

Heineken, for whom western Europe made up over half of revenues in 2009, suffered a group volume decline on a like-for-like basis of 3.1% in 2010.

Heineken’s purchase of the beer business of Mexico’ FEMSA is set to boost its operating profit from more buoyant emerging markets to 40% from 32% as well as securing brands Dos Equis, Tecate and Sol.

The Dutch brewer’s net profit before one-offs rose by 37% last year to €1.45 billion ($1.96 billion), against the average €1.38 billion expected in a Reuters poll of 11 brokers.

On a like-for-like basis, the increase was 19.7%. Heineken had forecast a rise of at least a low double-digit percentage.

Operating profit before one-offs rose by 25%, or 8.6% on a like-for-like basis, to €2.61 billion, compared to a consensus forecast of €2.47 billion.

The company delivered €280 million of savings under its total cost management programme, as well as €42 million in synergy savings from its Mexican takeover.

World number four Carlsberg reports full-year figures on 21 February, market leader Anheuser-Busch InBev on 3 March. SABMiller, with a financial year running to the end of March, will report full-year earnings on 18 May.