On an organic1 basis, revenue grew 3.0% driven by higher volumes and improved price and sales mix;
- Higher marketing investment supported total consolidated volume and consolidated beer volume organic growth of 1.1% and 2.2%, respectively;
- Volume of the Heineken┬« brand in the international premium segment increased 4%, outperforming group beer volumes, supported by the continued success of the global brand campaign “Open Your World”;
- Organically, EBIT (beia) was lower, primarily due to higher planned costs;
- Reaffirm outlook for full year 2011 net profit (beia) to be broadly in line with last year, on an organic basis;
- The share repurchase programme in connection with the acquisition of FEMSA Cerveza has been completed ahead of schedule.
Results During the quarter, revenue grew 0.6% to Ôé¼4,645 million, including a positive first time consolidation impact of Ôé¼32 million, or 0.7%, mainly related to the acquired breweries in Nigeria in January 2011. Foreign currency movements contributed to a negative translational effect on revenues of 3.1% in the quarter. This primarily reflects devaluation of the Nigerian naira, Polish zloty, British pound and Mexican peso versus the euro reporting currency. On an organic basis, revenue grew 3.0%, reflecting a positive volume effect of 0.5% (including the impact of country mix) and improved price and sales mix of 2.5%.
On an organic basis, EBIT (beia) was lower in the quarter. While revenues increased and ongoing TCM cost savings were realised, the effect of poor weather in July and early August resulted in negative operational leverage in Europe. In addition, higher planned marketing spend, upfront capability building investments in Commerce and Business Services and a low single-digit increase in input costs per hectolitre reduced profit. In the quarter, a slight positive consolidation scope impact was more than offset by an adverse translational effect from foreign currency movements.
HEINEKEN’s share of net profit of associates and joint ventures grew substantially, driven by strong performances of the Asia Pacific Breweries and South African joint venture operations.There were no exceptional costs in the quarter. Reported net profit in the quarter was Ôé¼525 million, broadly in line with the prior year.
Full Year Outlook
HEINEKEN confirms its earlier outlook for net profit (beia) to be broadly in line with last year, on an organic basis. The Company reaffirms its previous cost synergy target, related to the acquisition of FEMSA Cerveza, of Ôé¼150 million by the end of 2013. The Company reiterates its estimate of an average interest rate of around 5.5% and does not expect material changes to the effective tax rate (beia) in 2011 (2010: 27.3%).
Total Consolidated Volume
|Q3 2011 (mhl)||Change (%)|
Organic Change (%)
9 months 2011 (mhl)
Organic Change (%)
|14.6||4.8||4.8||Central & Eastern Europe||37.9||6.6||6.6|
|7.1||10||6.2||Africa & the Middle East||20.8||11||5.8|
In the third quarter, total consolidated volume grew by 1.1% on an organic basis, with growth in consolidated beer volume (+2.2%) partly offset by lower volumes in wholesale operations and soft drinks. Volume of the cider category was broadly in line with the prior year.
Consolidated Beer Volume
Q3 2011 (mhl)
Organic Change (%)
9 months 2011 (mhl)
Organic Change (%)
|13.8||5.8||5.8||Central & Eastern Europe||35.6||7.5||7.5|
|5.2||12||6.4||Africa & the Middle East||15.9||15||7.8|
Group Beer Volume
|Q3 2011 (mhl)||Change (%)||Organic Change (%)|
|9 months 2011 (mhl)||Change (%)||Organic Change (%)|
|16.0||4.9||4.9||Central & Eastern Europe||41.4||6.5||6.5|
|6.8||10||6.0||Africa & the Middle East||20.5||11||5.9|
Group beer volume development in the third quarter 2011Group beer volume grew 2.3% on an organic basis, with volume gains across four of the five regions.
In Western Europe, group beer volume decreased 1.7% organically. This primarily reflects the impact of unusually poor weather in July and early August across large parts of the region and ongoing economic uncertainty. However, group beer volumes showed a solid improvement in the latter part of the quarter as weather conditions became favourable. In the quarter, volume was lower in the United Kingdom, France, Netherlands and Spain, while volume in Italy grew in the low-single-digits.
In Central & Eastern Europe, group beer volume grew 4.9%, on an organic basis, driven by a strong volume rebound in Russia. Volume also increased in other key markets including Austria, Hungary and Romania, whilst volume declined in Poland and Greece. In the latter market, the effect of government austerity measures continues to impede consumer demand, leading to a high single-digit decline in volume in the quarter.
In Africa & the Middle East, group beer volume was up 6%, on an organic basis, led by high single-digit growth in Nigeria, Rwanda and our joint venture in the Republic of Congo. Volume of our South African joint venture grew in the mid single-digits, while volume in the Democratic Republic of Congo grew in the low single-digits. Volume in Egypt declined by high single-digits, reflecting a slower pace of volume decline compared with the first half of 2011. Heineken completed the transfer of three breweries acquired from the Sona Group to Nigerian Breweries in early October. The two breweries acquired in Ethiopia in August 2011 will be consolidated in the fourth quarter of 2011.
The Americas achieved organic group beer volume growth of 0.9% driven by higher volume in Brazil, the Caribbean region and the CCU joint venture in Chile and Argentina.
Depletions in the USA declined at a slightly slower rate versus the first half of 2011 with improving trends for the Heineken┬« brand and continuing strong double-digit growth of Dos Equis. Volume in Mexico was in line with the prior year period. The successful implementation of the commercial strategy and realisation of planned cost synergies in Mexico continues to support positive revenue and profit momentum in the country.
In Asia Pacific, group beer volume increased 3.8% organically, led by mid single-digit growth at our Asia Pacific Breweries joint venture, primarily driven by a continued strong performance in Vietnam. The Taiwanese and South Korean export markets grew strongly, while volume of the United Breweries joint venture in India grew moderately following strong comparative growth in the prior year quarter.
Global brand volume development in the third quarter 2011
Volume of the Heineken┬« brand in the international premium segment grew in the third quarter and year-to-date by 4.0% and 4.4%, respectively. The Africa & the Middle East and Asia Pacific regions led this solid brand performance, up 18% and 15%, respectively, in the quarter. Strong activation around the “Open Your World” global marketing campaign supported brand growth in many key markets including the UK, Mexico, Brazil, Chile, Nigeria, South Africa, Vietnam and Taiwan. The Heineken┬« brand was launched in Mumbai in August 2011 and will be rolled-out to other major Indian cities in the coming months. Brand volumes declined in Greece and the USA, primarily reflecting the challenging economic conditions in these markets.
Volume of Desperados, the tequila-flavoured beer, grew 18% in the quarter. This follows successful launches in 10 countries since the beginning of 2011 and continued growth in existing markets, led by strong volume gains in France.
Volume of Strongbow was in line with the prior year quarter. Higher brand volumes in South Africa and Italy were offset by a low single-digit decline in the UK in the quarter.
At the end of September 2011, HEINEKEN privately placed US$90 million of notes with a 6-year maturity, further improving the currency and maturity profile of its long-term debt.
On 3 October 2011, the Company announced that all 29,172,504 shares under the terms of the Allotted Share Delivery Instrument (“ASDI”) concluded between HEINEKEN N.V. and Fomento Econ├│mico Mexicano, S.A.B. de C.V. (“FEMSA”) were repurchased. All repurchased shares have now been delivered. Based on the current shareholders equity base of HEINEKEN N.V., the weighted average diluted number of shares outstanding would be approximately 586.3 million for the full year 2011 and 576.0 million for the full year 2012. The net debt position at the end of September 2011 was broadly in line with the amount at 30 June 2011, despite cash outflows associated with an accelerated execution of the ASDI repurchase programme and recent acquisitions in Ethiopia.
HEINEKEN continues to target a cash conversion rate of around 100% for the full year 2011.