Heineken N.V. reports 2013 half year results: Resilient performance in challenging market conditions


  • Group revenue grew 3% including the full consolidation of APB[1]; organically, group revenue 1% lower with a total volume decline of 3% and revenue per hectolitre up 2%
  • Group operating profit (beia) increased 5%; organically, group operating profit (beia) was in line with last year
  • Strong underlying performance of APB, with volume growth of 10% and operating profit growth of circa 20%; integration successfully completed
  • Developing markets delivered 7% organic operating profit (beia) growth and now comprise half of group operating profit (beia)
  • €139 million of pre-tax TCM2 cost savings delivered in the first half of 2013; additional programme cost savings of €100 million identified
  • Net profit (beia) of €679 million, broadly in line with prior year on an organic basis; diluted EPS (beia) declined 1%


Jean-François van Boxmeer, Chairman of the Executive Board & CEO, commented:
"We continue to operate in a challenging trading environment. While this has impacted our organic top-line performance, our increased emphasis on higher growth regions is delivering, with organic operating profit in developing markets growing 7%. Our ongoing focus on costs has generated a further €139 million of savings in the first half of 2013. Although the volume trends have improved in July with the warm summer weather in Europe, economic conditions in several of our core markets continue to constrain consumer spending. However, we will continue to strengthen our business through sustained brand investment and a focus on delivering value through on-going revenue management and cost saving initiatives."


Key financials[2]
 (in mhl or € million unless otherwise stated)
HY13 HY12 Total
Organic growth
Group revenue 10,375 10,070 3 -1
Group revenue/ hl (in €) 94 90 4 2
Group operating profit (beia) 1,448 1,378 5 -
Group operating profit (beia) margin 14.0% 13.7% +30bps
Consolidated revenue 9,354 8,778 7 -3
Consolidated operating profit (beia) 1,327 1,150 15 -2
Net profit (beia) 679 688 -1 -
Net profit 639 766 -17
Diluted EPS (beia) (in €) 1.18 1.19 -1
Free operating cash flow 178 345 -48
Net debt/ EBITDA (beia)[3] 2.9x 2.2x

[1] Asia Pacific Breweries and Asia Pacific Investment Pte Ltd
[2] Refer to the Definitions and Glossary sections for an explanation of non-IFRS measures and other terms used throughout this report; 2012 financials have been restated for the impact of revised IAS19
[3] Includes APB on a 12 month combined pro forma basis

Group revenue declined 1% organically, as a 3% decline in group total volume was only partly offset by a 2% increase in group revenue per hectolitre. The decline in group beer volume reflects a combination of unseasonably wet and cold weather conditions and continued weak consumer sentiment in Europe and the U.S. This was further compounded by a moderation in economic growth in key developing markets and the negative effect of destocking in France following a substantial excise duty increase in January 2013. Group operating profit (beia) was in line with prior year on an organic basis. Group operating profit (beia) margin expansion of 30 basis points was led by the full consolidation of APB and higher margins in the Americas region. Margins also benefited from the one-time disposal of assets in Europe.

Heineken® & Innovation
(in mhl or %)
2Q13 Organic
 HY13 Organic
Heineken® in premium segment 7.5 -1 13.3 -3
Africa Middle East 0.9 7 1.7 4
Americas 2.2 - 4.0 -3
Asia Pacific 1.4 -2 2.9 -
Central & Eastern Europe 0.8 2 1.2 2
Western Europe 2.2 -5 3.5 -9
Innovation rate 6.0%

Heineken® volume in the international premium segment declined by 3% against strong growth of 6% in the comparable prior year period. Excluding the impact of one less selling day and destocking in France and the U.S, Heineken® volume was in line with prior year. The continued success of the 'Open Your World' campaign and sustained brand investment continue to support strong brand equity for Heineken®. At the recent Cannes Lions International Festival of Creativity, the Company won 17 Lion awards, 15 of which were for the Heineken® brand, including the prestigious Grand Prix for Creative Effectiveness.

HEINEKEN has a strong innovation pipeline and has continued to utilise its portfolio of global and local brands to drive initiatives which can be rolled out across multiple markets. In the first half of 2013, the innovation rate reached 6%, with innovation contributing over €600 million of revenues during the period. The new 'Radler' product varieties (a mix of beer and 100% natural juice) were successfully launched in a further 12 markets, bringing the total number of markets with local 'Radler' beers to 24 across three regions. Our global cider brand, Strongbow Gold, was launched in Mexico in 2013 with encouraging early results.

TCM2 Cost Savings (pre-tax)
(in € million)
 HY13 % of total
(since 2012)
% of total
HEINEKEN 139 100% 335 100%
Africa Middle East 23 17%  44 13%
Americas 38 27% 67 20%
Asia Pacific 11 8% 11 3%
Central & Eastern Europe 23 17% 73 22%
Western Europe 29 20% 100 30%
Head Office 15 11% 40 12%

TCM2 delivered €139 million of pre-tax cost savings in the first half of 2013. Supply chain and commerce contributed 59% and 22% of realised cost savings, respectively. Reduced fixed costs represent approximately two thirds of total cost savings mainly across supply chain, commerce, wholesale and global support functions. In the first half of the year, upfront costs related to the set-up of the GBS organisation were €31 million (including capitalised IT infrastructure costs of €9 million).
This brings the cumulative amount of upfront GBS costs to €133 million, of which €104 million has been expensed (primarily in Head Office) and €29 million capitalised.


(Based on consolidated reporting)

  • Top-line: For the remainder of the year, economic uncertainty and ongoing weak consumer sentiment is expected to persist across many key markets. Consequently, although we benefited from better weather conditions in July in Western Europe and anticipate improved volumes in some developing markets, HEINEKEN does not expect a material change to underlying trading conditions across the majority of its markets.
  • Marketing and selling expenses: HEINEKEN still expects marketing and selling (beia) expense as a percentage of revenue to remain broadly stable in 2013 (2012: 12.2%) demonstrating a continued commitment to invest in brands and innovation.
  • Input costs: HEINEKEN still forecasts a slight increase in input cost prices in 2013 (excluding the effect of currency translation).
  • Total Cost Management 2 (TCM2): Following the identification of additional cost savings, HEINEKEN now expects to realise an approximate €625 million (previously €525 million) of cost savings under the 3-year TCM2 programme ending 2014. HEINEKEN expects to incur an approximate €70 million of upfront Global Business Services (GBS) costs in 2013.
  • Effective tax rate: HEINEKEN still expects the effective tax rate (beia) in 2013 to be in the range of 27% to 29% (2012: 26.6% restated for revised IAS19). The higher tax rate can be primarily explained by the result of favourable outcomes with tax authorities in 2012 and the full consolidation of APB which is subject to a higher effective tax rate.
  • Interest rate: HEINEKEN still forecasts an average interest rate of around 4.5% in 2013 (2012: 5.4%) reflecting lower coupons on recent bond issuances.
  • Acquisition of APB: The acquisition of APB is still expected to be marginally accretive to earnings per share in 2013.
  • Net profit (beia): HEINEKEN expects net profit (beia) to be broadly in line with last year on an organic basis. The combined impact of consolidation changes and foreign currency translation movements are expected to reduce full year 2013 net profit (beia) by approximately €25 million. This includes a negative consolidation impact of €40 million in 2013 related to revised IAS19.
  • Cash flow/ capital expenditure: In 2013, capital expenditure related to property, plant and equipment (including APB) is forecasted to be €1.4 billion (previously €1.5 billion; 2012: €1.2 billion). HEINEKEN still expects a cash conversion ratio of below 100% in 2013. HEINEKEN remains committed to achieving its long-term target net debt/ EBITDA (beia) ratio of below 2.5 times by the end of 2014.


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 €0.36 per share of €1.60 nominal value will be paid on 3 September 2013. The shares will trade ex-dividend on 23 August 2013.


Organic growth excludes the effect of foreign currency translational effects, consolidation changes, accounting policy changes, exceptional items and amortisation of acquisition-related intangibles. Beia refers to financials before exceptional items and amortisation of acquisition-related intangibles. Group figures include HEINEKEN's attributable share of joint ventures and associates. Organic growth calculations assume HEINEKEN's joint venture share of 41.9% of APB and 50% of APIPL prior to consolidation is maintained through to 15 November 2013. Organic growth of consolidated volume, consolidated revenue and consolidated operating profit (beia) excludes any impact from APB/APIPL. Organic growth on group volume and group financials includes an impact from APB/APIPL. Organic growth calculations are adjusted for the previous 3-month delay reported by APB and APIPL, without a restatement to 2012. Comparative 2012 financials have been adjusted for the impact of revised IAS19. In 2013, the first time impact of revised IAS19 on operating profit (beia), EBIT (beia), net profit (beia) and EPS (beia) will be treated as a non-organic item.


Media Investors
John Clarke George Toulantas
Head of External Communication Director of Investor Relations
John-Paul Schuirink Aarti Narain
Financial Communications Manager Investor Relations Manager
E-mail: pressoffice@heineken.com E-mail: investors@heineken.com
Tel: +31-20-5239355 Tel: +31-20-5239590

Investor Calendar Heineken N.V.

What's Brewing Seminar, New York

6 September 2013
Trading update for Q3 2013   23 October 2013
Financial Markets Conference, Mexico 5-6 December 2013

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 8257 Local line: +44 (0)20 34271918
National free phone: 0800 020 2576 National free phone: 0800 279 4977
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Local line: +1 646 254 3363
National free phone: 1877 280 2296

Participation/ confirmation code for all countries: 8100988

Editorial information:
HEINEKEN is a proud, independent global brewer committed to surprise and excite consumers with its brands and products everywhere. The brand that bears the founder's family name - Heineken® - is available in almost every country on the globe and is the world's most valuable international premium beer brand. The Company's aim is to be a leading brewer in each of the markets in which it operates and to have the world's most valuable brand portfolio. HEINEKEN wants to win in all markets with Heineken® and with a full brand portfolio in markets of choice. The Company is present in over 70 countries and operates more than 165 breweries. HEINEKEN is Europe's largest brewer and the world's third largest by volume. HEINEKEN is committed to the responsible marketing and consumption of its more than 250 international premium, regional, local and specialty beers and ciders. These include Heineken®, Amstel, Anchor, Biere Larue, Bintang, Birra Moretti, Cruzcampo, Desperados, Dos Equis, Foster's, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Strongbow, Tecate, Tiger and Zywiec. Our leading joint venture brands include Cristal and Kingfisher. The number of people employed is over 85,000. Heineken N.V. and Heineken Holding N.V. shares are listed on the NYSE Euronext in Amsterdam. Prices for the ordinary shares may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on the Reuter Equities 2000 Service under HEIN.AS and HEIO.AS. HEINEKEN has two sponsored level 1 American Depositary Receipt (ADR) programmes: Heineken N.V. (OTC: HEINY) and Heineken Holding N.V. (OTC: HKHHY). Most recent information is available on HEINEKEN's website: www.theHEINEKENcompany.com.

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, 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 are only relevant as of the date of this press release. HEINEKEN does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of these statements. Market share estimates contained in this press release are based on outside sources, such as specialised research institutes, in combination with management estimates.