Amsterdam, 12 February 2018 - Heineken N.V. (EURONEXT: HEIA;
OTCQX: HEINY) announces:
- Organic revenue (beia) +5.0% with revenue (beia) per hectolitre
+2.1%
- Consolidated beer volume +3.0% with growth in all regions
- Heineken® volume +4.5%
- Operating profit (beia) organic growth of +9.3%; operating
margin (beia) expansion of +40 bps excluding the Brasil Kirin,
Punch and Lagunitas acquisitions
- Net profit (beia) of €2,247 million, +9.3% organically
- Diluted EPS (beia) +7.0% to €3.94
- Proposed 2017 total dividend +9.7% at €1.47 per share
CEO STATEMENT
Jean-François van Boxmeer, Chairman of the Executive Board /
CEO, commented:"We delivered strong results in 2017, with all
regions contributing to organic growth in volume, revenue and
operating profit. The Heineken® brand performed very well and
Heineken® 0.0 was launched in 16 countries. During the year, we
became the second largest beer company in Brazil with the
acquisition of Brasil Kirin, we bought 1,900 pubs from Punch
Taverns in the UK and acquired full ownership of Lagunitas, where
we strongly believe in the expansion of the brand as an IPA of
reference outside its core US market. We also made good progress
with our sustainability agenda. We have already surpassed our 2020
CO2 emissions target and we have set new ambitious objectives for
2030 with our 'Drop the C' programme.
We expect the environment will continue to be marked by
volatility and uncertainty. We are committed to long-term value
creation and will continue to strive for superior top line growth
whilst working on improving our operating profit margin. In the
coming years, we expect this to be driven by Heineken® as well as
our portfolio of international brands, craft & variety, low
& no-alcohol and cider, with a focus on premiumisation,
combined with revenue and cost management initiatives. For 2018,
excluding major unforeseen macro economic and political
developments, we expect to deliver an operating profit margin
expansion of around 25bps[1]. This includes a residual dilutive
effect on margins from the acquisition of Brasil Kirin, whose
integration and results are very encouraging."
FINANCIAL SUMMARY
Key
financials[2] |
FY17 |
FY16 |
Total
growth |
Organic
growth |
(in mhl or € million unless otherwise stated) |
|
|
% |
% |
Revenue (beia) |
21,908 |
20,792 |
5.4 |
5.0 |
Revenue |
21,888 |
20,792 |
5.3 |
|
Revenue (beia) per hl (in €) |
87 |
91 |
-4.6 |
2.1 |
Operating profit (beia) |
3,759 |
3,540 |
6.2 |
9.3 |
Operating profit (beia) margin |
17.2% |
17.0% |
14bps |
|
Net
profit (beia) |
2,247 |
2,098 |
7.1 |
9.3 |
Net
profit |
1,935 |
1,540 |
25.6 |
|
Diluted EPS (beia) (in €) |
3.94 |
3.68 |
7.0 |
|
Free operating cash flow |
2,031 |
1,773 |
14.6 |
|
Net debt / EBITDA (beia)[3] |
2.5 |
2.3 |
|
|
1 Excluding the one-time benefit of the implementation of IFRS
15 as of 1 January 2018.2 Consolidated figures are used throughout
this report, unless otherwise stated; please refer to the Glossary
section for an explanation of non-GAAP measures and other terms
used throughout this report. 3 Includes acquisitions and excludes
disposals on a 12 month pro-forma basis.
FULL YEAR 2018 OUTLOOK STATEMENT
- Economic conditions are expected to remain volatile and we have
assumed a negative impact from currency comparable to 2017.
- We expect further organic revenue and profit growth.
- Excluding major unforeseen macro economic and political
developments we expect to deliver an operating profit margin
expansion of around 25 bps. This includes a residual dilutive
effect from the acquisition of Brasil Kirin and excludes the
one-time benefit of IFRS 15 implementation.
- We expect an average interest rate (beia) broadly in line with
2017 (2017: 3.0%), and an effective tax rate (beia) of around 28%
(2017: 27.6%).
- Capital expenditure related to property, plant and equipment
should be slightly above €2 billion (2017: €1.7 billion).
OPERATIONAL REVIEW
The good performance in the first half continued during the
second part of the year. Revenue (beia) per hectolitre continued to
improve organically in all regions, excluding Asia Pacific due to
negative mix effects. Full year operating profit (beia) increased
9.3% organically, a slightly lower pace than the first part of the
year (1H17: 11.7%) as our commercial investments increased during
the second half as planned.
HEINEKEN continued to invest in key developing markets with the
expansion of production capacity in Mexico, Cambodia, Vietnam,
Ethiopia and Haiti, the opening of a new brewery in Ivory Coast and
the announcement of the construction of a new brewery in
Mozambique.
Revenue (beia) increased 5.0% organically, with a 2.9%
increase in total volume and a 2.1% increase in revenue (beia) per
hectolitre. In 2017 the underlying price mix impact was 2.5%. In
the second half revenue (beia) increased 4.3% (1H17: 5.7%), with
volume growth of 3.5% (1H17: 2.3%), revenue (beia) per hectolitre
was up 0.8% (1H17: 3.4%) and underlying price mix impact of 1.7%.
Reported revenue (beia) per hectolitre declined -4.6% mainly due to
the dilutive effect of the acquisition of Brasil Kirin.
Consolidated beer volumes(in mhl) |
4Q17 |
Organicgrowth% |
FY17 |
Organicgrowth% |
Heineken N.V. |
56.7 |
|
4.6 |
|
218.0 |
|
3.0 |
|
Africa,
Middle East & Eastern Europe |
10.6 |
|
7.2 |
|
40.1 |
|
4.8 |
|
Americas |
21.8 |
|
4.6 |
|
72.1 |
|
3.3 |
|
Asia
Pacific |
7.6 |
|
10.6 |
|
27.0 |
|
8.9 |
|
Europe |
16.8 |
|
0.6 |
|
78.8 |
|
0.2 |
|
Consolidated beer volume grew 3.0% organically in 2017,
with 2.6% growth in the first half and 3.5% growth in the second
half. Beer volume in the fourth quarter was up 4.6%, an
acceleration versus the 2.5% volume growth delivered in the third
quarter due to positive volume growth in Europe and accelerated
growth in the Americas.
Heineken® volume(in mhl) |
4Q17 |
Organicgrowth% |
FY17 |
Organicgrowth% |
Heineken® volume |
9.2 |
|
6.9 |
|
36.0 |
|
4.5 |
|
Africa,
Middle East & Eastern Europe |
1.6 |
|
18.7 |
|
5.2 |
|
12.8 |
|
Americas |
3.0 |
|
12.0 |
|
10.7 |
|
9.5 |
|
Asia
Pacific |
1.6 |
|
-5.3 |
|
6.3 |
|
-5.9 |
|
Europe |
3.0 |
|
3.9 |
|
13.8 |
|
3.1 |
|
Heineken® volume grew 4.5%, one of the brand's strongest
performances in recent years, with positive volume performance
across all regions apart from Asia Pacific. Volume grew double
digit in Brazil, South Africa, Russia, Mexico and Romania. The
brand also saw healthy growth across European markets including
Italy, Spain, France and the Netherlands benefiting from the steady
growth of Heineken® Lager as well as the launch of Heineken® 0.0
during the year. These results more than offset weaker volumes in
Vietnam, China and the US. Heineken® continues to benefit from
global platforms such as UEFA Champions League and Formula 1®.
Heineken® Light grew high single digit driven by launches in
Mexico, Indonesia, Poland, Greece and Switzerland and continued
growth in Australia, offsetting softer volume in the US.
Heineken® 0.0 is available in 16 markets and is delivering ahead
of expectations. Further roll-out is planned for 2018. Heineken®
0.0 is also at the heart of our 'When you drive, never drink'
campaign together with our sponsorship of Formula 1®.
The international brand portfolio grew high single digit. Volume
was up double digit for Tiger, Krušovice and
Birra Moretti. Tecate, Desperados and
Red Stripe also delivered robust volume growth during the
year. Amstel volume was flat with the decline in Nigeria and
Greece offset by strong growth in Brazil. Sol declined mid
single digit as the high single digit growth outside of Mexico was
offset by lower domestic volume.
Cider volume increased low single digit to 4.9 million
hectolitres (2016: 4.8 million). Good progress was made with our
global cider strategy and volume outside the UK was up double
digit, driven by the strong growth in South Africa, Poland, Romania
and Vietnam. This offset a high single digit decline in the UK,
where volumes were impacted by a partial delisting.
Low & No-Alcohol (LNA) volumes
increased low single digit, delivering 12.5 million hectolitres in
2017 (2016: 12.4 million). Continued robust growth of Radler and
the launch of Heineken® 0.0 contributed to Europe's double digit
volume growth. Volumes in Nigeria and Egypt were adversely impacted
by the weaker macro economic environment and consumer
sentiment.
Craft & Variety volume grew double digit supported by
the strong performance of the international craft beers as well as
local craft propositions. In particular, Affligem and Mort Subite
in France, and Lagunitas both in the UK and US contributed to
category growth.
Among the innovations of 2017 was the launch of The
Blade, a countertop draught system for small outlets. Launched in
11 markets in the second half of the year, this innovation is
showing promising early results. HEINEKEN also launched new
e-commerce initiatives for both Business-to-Business and
Business-to-Consumer platforms, such as Beerwulf which is our new
Craft & Variety online business channel for consumers.
Operating profit (beia) grew 9.3% organically, primarily
reflecting higher revenue and cost efficiencies.
SUSTAINABILITY
HEINEKEN strongly believes that by fully integrating
sustainability into the way we do business, we are best placed to
make a meaningful positive impact on the world around us. HEINEKEN
continues to make significant progress in achieving its Brewing a
Better World commitments.
Highlights included decreasing average water consumption in
water-stressed areas to 3.2 litres of water per litre of beer
(2014: 3.8). Global average water consumption remained stable
compared to last year, and decreased 29% compared to 2008, the
baseline year for the 2020 commitments. 28% of main raw materials
came from sustainable sources (2016: 17%). 10% of total Heineken®
media spend was dedicated to responsible consumption campaigns, in
more than 70% of operating companies in scope.
HEINEKEN has now surpassed its 2020 target for CO2 emissions by
reaching 6.1 kg CO2 e/hl, down from 6.5 kg CO2 e/hl in 2016 (a 41%
decline since 2008). Emissions decreased in absolute terms as well:
even though production volumes were 57% higher than in 2008,
emissions were 7% lower. Today HEINEKEN announced its 2030 vision
for renewable energy and is setting a new ambition to reduce carbon
emissions.
NET PROFIT (beia)
Net profit (beia) increased 9.3% organically to €2,247 million
(2016: €2,098 million).
The impact of exceptional items and amortization of
acquisition-related intangibles (eia) on net profit was €312
million (2016: €558 million). In 2016 exceptionals included an
asset impairment in the Democratic Republic of Congo (DRC) of €286
million.
Net profit after exceptional items and amortization of
acquisition-related intangibles was €1,935 million (2016: €1,540
million).
TOTAL DIVIDEND FOR 2017
The Heineken N.V. dividend policy is to pay out a ratio of 30%
to 40% of full year net profit (beia). For 2017, payment of a total
cash dividend of €1.47 per share (2016: €1.34) will be proposed to
the Annual General Meeting of Shareholders (AGM) on 19 April 2018.
This represents an increase of 9.7% versus 2016, translating into a
37.3% payout. If approved, a final dividend of €0.93 per share will
be paid on 2 May 2018, as an interim dividend of €0.54 per share
was paid on 10 August 2017. The payment will be subject to a 15%
Dutch withholding tax. The ex-final dividend date for Heineken N.V.
shares will be 23 April 2018.
TRANSLATIONAL CURRENCY CALCULATED IMPACT FOR 2018
Using spot rates as at 7 February 2018 for the remainder of this
year, the calculated negative currency translational impact would
be approximately €190 million at consolidated operating profit
(beia), and €105 million at net profit (beia). Foreign exchange
markets remain very volatile.
SUPERVISORY BOARD COMPOSITION
Mr. J.A. Fernández Carbajal, Mr. J.G. Astaburuaga Sanjiinés, Mr.
J.M. Huët, and Mrs. A.M. Fentener van Vlissingen will have
completed their four-year appointment terms per the end of the AGM
on 19 April 2018.
Mr. Huët is eligible for reappointment for a period of four
years and a non-binding nomination shall be submitted to the AGM in
this respect. A non-binding nomination for the reappointment of Mr.
Fernández Carbajal and Mr. Astaburuaga Sanjiinés for a period of
four years shall also be submitted to the AGM. Both are
representatives of FEMSA (that (in)directly holds a 14.76% economic
interest in the Company), and their respective appointments are
based on the Corporate Governance Agreement, which was concluded
between (among others) the Company and FEMSA on 30 April 2010, and
which was approved by the AGM on 22 April 2010 (in connection with
the acquisition by the Company of FEMSA's beer activities).
The Supervisory Board is grateful for the commitment of Mrs.
Fentener van Vlissingen over the past twelve years and for her
meaningful contribution to the Supervisory Board, as well as its
Audit Committee and Selection and Appointment Committee.
A non-binding nomination will be submitted to the AGM in 2018 to
appoint Mrs. M. Helmes as a member of the Supervisory Board as of
19 April 2018 for a period of four years. It is the intention that
Mrs. Helmes will join the Audit Committee and in time become the
Chair of the Audit Committee, taking over this role from Mr. Huët
who will remain a member of the Audit Committee.
ENQUIRIES
Media |
Investors |
John-Paul
Schuirink |
Federico Castillo
Martinez |
Director of Global
Communication |
Investor Relations
Director |
Michael
Fuchs |
Chris MacDonald /
Aris Hernandez |
Financial
Communications Manager |
Investor Relations
Manager / Senior Analyst |
E-mail:
pressoffice@heineken.com |
E-mail:
investors@heineken.com |
Tel:
+31-20-5239355 |
Tel:
+31-20-5239590 |
INVESTOR CALENDAR HEINEKEN N.V.
Combined financial and
sustainability annual report publication |
19 February 2018 |
HEINEKEN IFRS 15
conference call |
20 February 2018 |
Trading Update for Q1
2018 |
18 April 2018 |
Annual General Meeting
of Shareholders |
19 April 2018 |
Financial Markets
Conference |
8/9 May 2018 |
Half Year 2018
Results |
30 July 2018 |
Trading Update for Q3
2018 |
24 October 2018 |
Conference call details
HEINEKEN will host an analyst and investor conference call in
relation to its 2017 FY results today at 10:00 CET/ 9:00 GMT. 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
794 8426 |
Local line: +44 (0)20
3003 2666 |
National free phone:
0800 022 9132 |
National free phone:
0808 109 0700 |
|
|
United States of
America |
|
National free phone:
+1866 966 5335 |
|
|
|
Participation password for all countries: Heineken |
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
portfolio of more than 300 international, regional, local and
speciality 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 over 80,000 employees and operate breweries, malteries,
cider plants and other production facilities in more than 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 on Twitter via
@HEINEKENCorp.
Market Abuse Regulation:This press release may contain inside
information within the meaning of Article 7(1) of the EU Market
Abuse Regulation.
Disclaimer: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.
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