Heineken N.V. reports 2015 half year results

Continued organic revenue and profit growth

Amsterdam, 3 August 2015 - Heineken N.V. (EURONEXT: HEIA; OTCQX: HEINY) today announced:

  • Group revenue +2.0% organically with group revenue per hectolitre up 1.1%
  • Group beer volume +1.0% driven by Americas, Asia Pacific and Africa Middle East
  • Heineken® volume in premium segment +4.7%  with growth across most regions
  • Innovation rate of 8.6%, contributing €854 million of revenues
  • Group operating profit (beia) +4.7% organically
  • Consolidated operating profit (beia) +3.4% organically
  • Net profit (beia) of €915 million, up 14% organically
  • Diluted EPS (beia) of €1.59 (2014:€1.34)

CEO Statement

Jean-François van Boxmeer, Chairman of the Executive Board & CEO, commented:

"These solid results are in line with our expectations and demonstrate the further progress we have made in delivering on our strategy. Despite strong prior year comparatives and challenging conditions in a number of markets, we saw positive top line and profit growth. Heineken® volume in the premium segment grew a further 4.7%, outperforming the total beer market. This continued positive momentum reflects the benefit from our exposure to high growth markets, a sustained focus on marketing and innovation, and the ability to drive efficiencies throughout the business. Our emphasis on innovation delivered €854 million in revenues. Whilst economic conditions and the pricing environment in certain key markets remain challenging, we are confident of continued progress and our full year expectations are unchanged."


Key financials1
 (in mhl or € million unless otherwise stated)
HY15 HY14 Total
Group revenue 10,926 10,196 7.2 2.0
Group revenue/ hl (in €) 95 90 5.7 1.1
Group operating profit (beia) 1,690 1,560 8.3 4.7
Group operating profit (beia) margin 15.5% 15.3% 20bps  
Consolidated revenue 9,896 9,274 6.7 1.9
Consolidated operating profit (beia) 1,549 1,454 6.5 3.4
Consolidated operating profit (beia) margin 15.7% 15.7% 0bps  
Net profit (beia) 915 772 19 14
Net profit 1,144 631 81  
Diluted EPS (beia) (in €) 1.59 1.34 19  
Free operating cash flow 486 571    
Net debt/ EBITDA (beia)2 2.4 2.5    

1 Refer to the Glossary section for an explanation of non-IFRS measures and other terms used throughout this report
2 Includes acquisitions and excludes disposals on a 12 month pro-forma basis


(Based on consolidated reporting)
Aside from an adjustment for capital expenditure guidance HEINEKEN reaffirms all elements of its 2015 outlook, as stated in its FY 2014 release dated 11 February 2015.

In 2015 HEINEKEN expects a continued challenging external environment, however, delivering on strategic priorities is expected to drive further organic revenue and profit growth.

Continued revenue growth: HEINEKEN expects positive organic revenue growth in 2015 with volume growth at a more moderate level than 2014, and weighted towards H2 (tougher comparatives in H1). Continued volume growth in developing markets will offset more subdued volume growth elsewhere. Revenue per hectolitre is expected to increase driven by revenue management. Pricing will be limited by deflationary and off premise pressure in some markets.

Increased commercial investment: HEINEKEN will continue its targeted higher commercial investments across the regions, and expects a slight increase in marketing and selling (beia) spend as a percentage of revenue in 2015 (2014: 12.7%).

Continued cost savings: HEINEKEN is committed to delivering further cost savings and will continue its focus on driving cost efficiencies across the company. These are an important driver of the medium term margin guidance. As a result of ongoing productivity initiatives, HEINEKEN expects an organic decline in the total number of employees in 2015.
Input cost prices are expected to be slightly lower in 2015 (excluding a foreign currency transactional effect).

Further margin expansion: HEINEKEN continues to target a year on year improvement in consolidated operating profit (beia) margin of around 40bps in the medium term. This will continue to be supported by tight cost management, effective revenue management and the anticipated faster growth of higher margin developing markets. In 2015 consolidated operating profit (beia) margin will be adversely impacted by approximately 25bps from the disposal of EMPAQUE, the Mexican packaging business, which completed in February. HEINEKEN expects to partially but not fully offset this, such that in 2015 consolidated operating profit (beia) margin expansion will be somewhat below the 40bps medium term level.

Foreign currency movements: Assuming spot rates as of 29 July 2015 there is no material change in the calculated positive 2015 currency translational impact compared to prior guidance. As such consolidated operating profit (beia) impact is expected to be approximately €130 million, and €80 million at net profit (beia). However the foreign exchange markets remain very volatile.

Improved financial flexibility: HEINEKEN remains focused on cash flow generation and disciplined working capital management, with a commitment to a long-term target net debt/EBITDA (beia) ratio of below 2.5x. In 2015, capital expenditure related to property, plant and equipment is now expected to be approximately €1.7 billion (2014: €1.5 billion), with the €100 million increase from the prior guidance due to foreign exchange. A cash conversion ratio of below 100% is expected in 2015 (2014: 79%).

Effective tax rate: HEINEKEN expects the effective tax rate (beia) for 2015 to be broadly in line with 2014 (29.7%).

Interest rate: HEINEKEN forecasts an average interest rate of c.3.7% in 2015.


The second quarter saw volume growth, although more moderate than in the prior year. This was in line with our expectations given the particularly strong comparatives in the same period last year. Revenue per hectolitre improved despite limited pricing particularly in Western Europe, and driven by a strong focus on revenue management. Innovation continued to play an important role in HEINEKEN's progress contributing revenues of €854 million in the first half. The organisational changes announced on 31 March 2015 will allow HEINEKEN to better focus on growth opportunities, to be more agile in responding to consumer needs in the marketplace, and to be more cost effective in doing so.   

HEINEKEN continues to invest in key developing growth markets. During the first half of the year the company announced capacity expansion plans in Mexico and Ethiopia, and opened a new brewery in Myanmar in July.

Group revenue increased 2.0% organically, comprising of a 0.9% increase in group total volume and a 1.1% increase in group revenue per hectolitre. Adjusting for negative country mix, revenue per hectolitre would have been up 1.7%. In the second quarter group revenue grew 1.8% on an organic basis with revenue per hectolitre up 1.6%, and up 2.1% adjusting for negative country mix.

Group beer volumes
(in mhl)
2Q15 2Q14 Organic
HY15 HY14 Organic
Heineken N.V. 55.0 54.6 0.1 98.2 96.6 1.0
Africa Middle East 7.8 7.5 3.7 14.8 14.3 2.8
Americas 14.9 14.8 1.7 28.5 27.6 3.6
Asia Pacific 6.4 6.1 4.2 12.0 11.3 6.1
Central & Eastern Europe 13.9 13.7 -1.7 22.7 22.7 -2.0
Western Europe 12.0 12.4 -3.9 20.2 20.8 -3.0

Group beer volume grew 1.0% organically in the first half of the year. As expected group beer volume growth was more moderate in the second quarter, up 0.1%. Comparatives in the prior year period benefited from favourable weather, particularly in Western Europe, and the football World Cup. Volume in the second quarter also included a negative impact from the earlier timing of Easter. HEINEKEN saw market share gains in several of its key markets including Vietnam, the Netherlands, Poland, the US, and Brazil.

Heineken® volume
(in mhl)
2Q15 Organic
 HY15 Organic
Heineken® volume in premium segment 8.2 3.4 14.9 4.7
Africa Middle East 0.9 7.9 1.9 8.6
Americas 2.3 2.6 4.5 5.1
Asia Pacific 1.6 5.3 3.1 7.4
Central & Eastern Europe 0.8 0.1 1.2 -2.1
Western Europe 2.6 2.6 4.2 2.6

Heineken® volume in the premium segment grew 4.7%, with positive performances in almost all regions. In particular, Heineken® volume saw double-digit volume growth in China, Brazil, Vietnam, Spain and Compañía Cervecerías Unidas S.A. (CCU) markets. The brand was also strong in key markets such as France, South Africa, the UK and Taiwan. These results more than offset weaker volume in Central and Eastern Europe driven by economic uncertainties in Greece and Russia. Heineken® benefited from the successful campaign to support the UEFA Champions League football sponsorship. This campaign was activated in 109 markets globally through digital innovation, special edition bottles, and the Global TV campaign combined with local winning top spins, both awarded at Cannes. The second half of the year has an exciting pipeline of campaigns to come including partnering the James Bond movie, sponsorship of the Rugby World Cup, the continuation of the Cities campaign, and Festive programmes. 

The first half of the year saw double digit volume growth of the global brands Desperados, Affligem and Sol Premium, reflecting the continued focus and success of the broader premium portfolio strategy. Desperados, the high margin tequila-flavoured beer, saw particularly strong performance in Poland, France and Spain. Affligem, the Belgian abbey beer brand, saw strong growth in Western Europe. CCU markets and Brazil were the key drivers of Sol Premium, the Mexican beer, volume growth.

Cider volume declined slightly, with the positive volume growth seen in the first quarter offset by weaker volumes in the second quarter in mainstream cider in the UK. However, the second quarter saw particularly strong double digit volume growth in Americas, and positive encouraging volume growth in Ireland and 10 new markets in Central and Eastern Europe. In Americas, the US, Canada and Mexico were the key drivers of growth. Innovations in the UK including Strongbow Cloudy Apple and Bulmers Zesty Blood Orange underpinned our leading position in the home base of cider.

HEINEKEN's focus on innovation delivered €854 million in revenue and the innovation rate increased to 8.6% (2014: 7.4%). The company continues to introduce both global and local brand and packaging innovations across multiple markets leveraging its worldwide scale. Key themes which remain a focus are addressing moderation, and improving the quality of the draft offer. 'Radler' beers continued their strong performance, and the 0.0% variant combined with new flavours continues to gain momentum with consumers. THE SUB®, the draught beer appliance, is showing positive signs and will be launched in China, its fifth market, this month. Brewlock, the on premise dispense system, is showing positive signs in the US. With a solid pipeline for the remainder of the year, further strong innovation momentum is expected.

Group operating profit (beia) grew 4.7% organically, primarily reflecting higher revenues and improved cost efficiencies partly offset by higher planned marketing and selling expenses.


In accordance with the existing dividend policy, HEINEKEN fixes its interim dividend at 40% of the total dividend of the previous year. As a result, an interim dividend of €0.44 per share of €1.60 nominal value will be paid on 12 August 2015. The shares will trade ex-dividend on 5 August 2015.


Media Investors
John Clarke Sonya Ghobrial
Director of Group Communication Director of Investor Relations
Christine van Waveren Marc Kanter / Gabriela Malczynska
Corporate & Financial Communication Manager Investor Relations Manager / Analyst
E-mail: pressoffice@heineken.com E-mail: investors@heineken.com
Tel: +31(0) 20 523 9355 Tel: +31(0) 20 523 9590

Investor Calendar Heineken N.V.

What's Brewing Seminar, London 27 August 2015
Trading update for Q3 2015 28 October 2015
What's Brewing Seminar, New York 19 November 2015
Full Year 2015 Results 10 February 2016

Conference call details
HEINEKEN will host an analyst and investor conference call in relation to this trading update today at 10:00 CET/ 9:00 BST. The call will be audio cast live via the company's website: www.theheinekencompany.com/investors/webcasts. An audio replay service will also be made available after the conference call at the above web address. Analysts and investors can dial-in using the following telephone numbers:

Netherlands United Kingdom
Local line: +31(0)20 716 8256 Local line: +44 (0) 20 3427 1900
National free phone: 0800 020 2577 National free phone: 0800 279 4841

United States of America
Local line: +1 646 254 3361
National free phone: 1 877 280 2296

Participation/ confirmation code for all countries: 2083527

Editorial information:
HEINEKEN is the world's most international brewer. It is the leading developer and marketer of premium beer and cider brands. Led by the Heineken® brand, the Group has a powerful portfolio of more than 250 international, regional, local and specialty beers and ciders. We are committed to innovation, long-term brand investment, disciplined sales execution and focused cost management. Through "Brewing a Better World", sustainability is embedded in the business and delivers value for all stakeholders. HEINEKEN has a well-balanced geographic footprint with leadership positions in both developed and developing markets. We employ 81,000 people and operate more than 160 breweries in 70 countries. Heineken N.V. and Heineken Holding N.V. shares trade on the Euronext in Amsterdam. Prices for the ordinary shares may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on Reuters under HEIN.AS and HEIO.AS. HEINEKEN has two sponsored level 1 American Depositary Receipt (ADR) programmes: Heineken N.V. (OTCQX: HEINY) and Heineken Holding N.V. (OTCQX: HKHHY). Most recent information is available on HEINEKEN's website: www.theHEINEKENcompany.com and follow us via @HEINEKENCorp.

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, change in 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 speak only of the date of this press release. HEINEKEN does not undertake any obligation to update these forward-looking statements contained in this press release. Market share estimates contained in this press release are based on outside sources, such as specialised research institutes, in combination with management estimates.