Cost savings, volume growth drive Heineken first-half profit

Wednesday 20 August 2014 13.05
Heineken reports better than expected H1 operating profits
Heineken reports better than expected H1 operating profits

Heineken, the world's third-largest brewer, today 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. 

The company, 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. 

Heineken had previously said its three-year savings plan, TCM2, would hit its €625m target this year. But today 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 company said Heineken was now the leading lager brand in Ireland, both in the pub and off-licence trade, while the company held a 28% share of the country's lager market.

It said the company's share of the market continued to grow here, largely due to the strong performance of brands like Coors Light and Tiger.

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 US 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% in the first half to €1.454 billion, above the €1.367 billion expected in a Reuters poll of seven analysts. 

Heineken said it would pay an interim dividend of 36 cent a share on September 2. 

The world's largest brewer, Anheuser-Busch InBev 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.