Amsterdam, 13 February 2019 - Heineken N.V. (EURONEXT: HEIA;
OTCQX: HEINY) announces:
- Net revenue (beia) organic growth +6.1% with +2.0% per
hectolitre
- Consolidated beer volume +4.2% with growth in all regions
- Heineken® volume +7.7%, best performance in over a decade
- Operating profit (beia) organic growth +6.4%
- Operating profit margin (beia) 17.2% (-17 bps1)
- Net profit (beia) €2,424 million, +12.5% organically
- Diluted EPS (beia) +7.9% to €4.25
- Proposed 2018 total dividend +8.8% at €1.60 per share.
CEO STATEMENT
Jean-François van Boxmeer, Chairman of the Executive Board /
CEO, commented:"In 2018 we delivered another year of superior
top-line growth. The Heineken® brand grew 7.7%, its best
performance in over a decade, with Heineken® 0.0 now available in
38 countries. Our premium portfolio grew double digit, led by our
international brands, craft & variety and cider portfolios. All
regions grew and Brazil recorded a strong performance following the
successful integration of our two businesses. Our operating profit
margin (beia) decreased by 17 bps due to the first time
consolidation of Brazil, rising input costs and adverse currency
developments. A key milestone in 2018 was the announcement of the
strategic partnership with CRE to join forces in China, a big
opportunity for both companies, which is pending regulatory
approval.
Our strategic priorities are growth oriented with an
ever-increasing emphasis on the sustainability of this growth, both
socially and environmentally. We focus on innovation and
operational excellence so our consumers enjoy our brands and we
exceed our customers' expectations, whilst seeking productivity
improvements and constantly reassessing our spending behaviour.
Going into 2019, we expect the environment to remain uncertain and
volatile. Overall, we anticipate our operating profit (beia) to
grow by mid-single digit on an organic basis."
FINANCIAL SUMMARY2
BEIA Measures |
€ million |
Organic growth (%) |
IFRS Measures |
€ million |
Total growth (%) |
Revenue (beia) |
26,811 |
|
5.9 |
|
Revenue |
26,811 |
|
3.7 |
|
Net Revenue (beia) |
22,471 |
|
6.1 |
|
Net Revenue |
22,471 |
|
4.0 |
|
Operating profit
(beia) |
3,868 |
|
6.4 |
|
Operating profit |
3,137 |
|
-6.4 |
|
Operating profit (beia)
margin |
17.2 |
% |
|
Net
profit |
1,903 |
|
-1.6 |
|
Net profit (beia) |
2,424 |
|
12.5 |
|
Diluted EPS (in €) |
3.34 |
|
-1.5 |
|
Diluted EPS (beia) (in
€) |
4.25 |
|
7.9 |
|
|
|
|
Free operating cash
flow |
2,246 |
|
|
Operating profit and net profit include
€183 million of impairments, mainly in the DRC |
Net debt
/ EBITDA (beia)3 |
2.3 |
x |
|
1 Margin expansion is calculated using the last year restated
margin as baseline to exclude any benefit from the first
application of IFRS 15. Please refer to page 17 and 25 for more
details. 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 2019 OUTLOOK STATEMENT
For 2019, we expect the following:
- Continued volatility in economic conditions
- Superior top-line growth driven by volume, price and
premiumisation
- Mid-single digit increase of input and logistic costs per
hectolitre on an organic basis
- Continued cost management and productivity initiatives
Given this, we expect operating profit (beia) to grow by
mid-single digit on an organic basis, excluding any major
unforeseen macro economic and political developments.
We also anticipate:
- An average interest rate (beia) broadly in line with 2018
(2018: 3.2%)
- An effective tax rate (beia) between 27% and 28% (2018:
26.4%)
- Capital expenditures related to property, plant and equipment
around €2 billion (2018: €1.9 billion).
OPERATIONAL REVIEW
Top-line performance in 2018 was strong with robust volume
growth throughout the year, and net revenue accelerating in the
second half driven by price mix. Operating profit (beia) increased
6.4% organically, at a faster rate in the second half of the year
(2H18: 11.1%) than in the first (1H18: 1.3%) driven by higher
revenue growth and overall slower growth of expenses despite
continued pressure from higher input and logistics costs.
HEINEKEN continued to invest in key developing markets with the
expansion of production capacity in Mexico, Vietnam, Ethiopia,
Brazil, Cambodia, Haiti and South Africa, and the construction of a
new brewery in Mozambique.
Net revenue (beia) increased 6.1% organically, with a
4.0% increase in total consolidated volume and a 2.0% increase in
revenue (beia) per hectolitre. The underlying price mix impact was
2.9%. In the second half of the year net revenue (beia) increased
6.5% (1H18: 5.6%), with total consolidated volume growth of 3.7%
(1H18: 4.4%), net revenue (beia) per hectolitre up 2.8% (1H18:
1.1%) and underlying price mix impact of 2.9% in line with the full
year. Reported net revenue (beia) per hectolitre declined 3.9%
mainly due to the translational currency impact and from the
dilutive effect of the acquisition in Brazil.
Consolidated beer volume(in mhl) |
4Q18 |
Organicgrowth% |
FY18 |
Organicgrowth% |
Heineken N.V. |
58.6 |
|
3.3 |
|
233.8 |
|
4.2 |
|
Africa,
Middle East & Eastern Europe |
11.2 |
|
5.9 |
|
41.7 |
|
5.0 |
|
Americas |
22.2 |
|
1.8 |
|
83.3 |
|
5.4 |
|
Asia
Pacific |
7.8 |
|
3.3 |
|
29.0 |
|
8.2 |
|
Europe |
17.4 |
|
3.5 |
|
79.8 |
|
1.3 |
|
Consolidated beer volume grew 4.2% organically in 2018,
with 4.5% growth in the first half and 4.0% growth in the second
half. Beer volume in the fourth quarter was up 3.3%, against a
challenging comparable base (Q4 2017: 4.6%).
Heineken® volume(in mhl) |
4Q18 |
Organicgrowth% |
FY18 |
Organicgrowth% |
Heineken® volume |
9.9 |
|
6.7 |
|
38.7 |
|
7.7 |
|
Africa,
Middle East & Eastern Europe |
2.0 |
|
24.5 |
|
6.5 |
|
25.5 |
|
Americas |
3.0 |
|
0.3 |
|
11.5 |
|
7.8 |
|
Asia
Pacific |
1.6 |
|
-0.7 |
|
6.2 |
|
-1.3 |
|
Europe |
3.3 |
|
7.7 |
|
14.5 |
|
5.1 |
|
Heineken® volume grew 7.7%, its strongest performance in
more than a decade. Ten markets now sell more than 1 million
hectolitres of Heineken®. Volume grew double digit in
Brazil, South Africa, Russia, the UK, Nigeria, Mexico, Poland and
Germany, and China returned to growth. The Heineken® brand
also saw healthy growth across European markets from both
Heineken® Original as well as the ongoing success of
Heineken® 0.0. These results more than offset weaker volumes
in Vietnam and the US. Heineken® 0.0 is available in 38
markets (2017: 16) and further roll-out is planned for 2019.
The international brand portfolio grew double digit.
Volume was up double digit for Tiger, Desperados, Birra Moretti and
Krušovice. Amstel grew high single digit driven by strong growth in
Brazil. Tecate grew mid-single digit as robust performance in
Mexico more than offset a decline in the US.
Cider volume increased double digit to 5.6 million
hectolitres (2017: 4.9 million). In the UK volume grew mid-single
digit and outside of the UK volume reached more than 2 million
hectolitres. Strongbow and its flavour variants continue to gain
share in South Africa. Performance of our recently introduced
Ladrón de Manzanas in Spain and Strongbow in Vietnam is
promising.
Low & No-Alcohol (LNA) volumes increased mid-single
digit, delivering 13.1 million hectolitres in 2018 (2017: 12.5
million). In Europe volumes grew high-single digit due to the
continued success of Heineken® 0.0 and Radler. In Ethiopia,
Sofi Malt and its new coffee variant Sofi Buna boosted the growth
of the LNA portfolio. Volumes in Nigeria were adversely impacted by
the weak macro-economic environment and SKU rationalisation.
Our Craft & Variety volume grew double digit.
Affligem launched a lower alcohol variant driving double digit
growth. Lagunitas continues to expand outside the US and is now
also brewed in the craft brewery in Wijlre in the Netherlands. Mort
Subite grew double digit. Craft line extensions such as Brand IPA
in the Netherlands and Birra Moretti Regionale in Italy also grew
double digit.
Among the key innovations rolled-out in 2018 was The
Blade, a counter-top draught system for small outlets introduced in
late 2017. Sales of The Sub, an at home draught device,
accelerated. HEINEKEN continues to develop and roll out e-commerce
Business-to-Business and Business-to-Consumer platforms across the
group.
Operating profit (beia) grew 6.4% organically, as a
result of higher revenues and cost efficiencies which more than
offset higher input and logistic costs. Including consolidation,
currency, and exceptional items, most notably an impairment in the
Democratic Republic of Congo (DRC) in 2018 and exceptional gains
and benefits in 2017 (due to the sale of non-beer and cider
wholesale operations in the Netherlands), Operating profit
declined -6.4%.
BREWING A BETTER WORLD
HEINEKEN surpassed its 2020 commitment for CO2 at the end of
2017. In 2018 emissions were further reduced to 5.5 kg of CO2
equivalent per hectolitre, a 47% decrease since 2008. Last February
HEINEKEN announced Drop the C, its new 2030 ambition for CO2
reduction. The ambition is to have 70% of all electric and thermal
energy needs in production covered with renewable energy. Since
then, the company has embarked on 13 renewable energy projects,
some of which will be featured in our annual report. At the end of
2018, 15% of electric and thermal energy used in production came
from renewable sources.
HEINEKEN reached its 2020 water efficiency ambition at the end
of 2018. The average water consumption of its breweries was at 3.5
hectolitres of water per hectolitre of beer, a reduction of 30%
compared to 2008. The company also surpassed its 2020 target for
average water consumption of its breweries in water-stressed areas,
reaching 3.2 hectolitres of water per hectolitre of beer. Aware of
the pressing water issue globally, HEINEKEN is developing a new
2030 ambition which will be announced in the first quarter of
2019.
In 2018, 69 markets dedicated at least 10% of Heineken®
media spend to Responsible Drinking campaigns. In addition, the
'When You Drive, Never Drink' campaigns received significant
exposure through the Formula 1® partnership.
HEINEKEN regularly reviews its codes and policies and in 2018 it
refreshed the Code of Business Conduct, including the Human Rights
Policy and the Responsible Marketing Code. The new Code and
underlying policies were rolled-out in all operating companies and
in 36 languages. Since 2016, HEINEKEN has worked with the centre of
expertise Shift to identify, address and report human
rights-related risks in our operations in line with the UN Guiding
Principles on Business and Human Rights. In 2018, with the
suggestions and advice of NGOs and brand promoters themselves, the
company renewed its Brand Promoter Policy and implemented it
between June and December.
NET PROFIT
Net profit (beia) increased 12.5% organically to €2,424 million
(2017: €2,247 million).
The impact of exceptional items and amortization of
acquisition-related intangibles (eia) on net profit was €521
million (2017: €312 million). These items included impairments of
€183 million, mainly in the Democratic Republic of Congo (DRC) in
the second half of the year.
Net profit after exceptional items and amortization of
acquisition-related intangibles was €1,903 million (2017: €1,935
million).
TOTAL DIVIDEND FOR 2018
The Heineken N.V. dividend policy is to pay out a ratio of 30%
to 40% of full year net profit (beia). For 2018, payment of a total
cash dividend of €1.60 per share (2017: €1.47) will be proposed to
the Annual General Meeting of Shareholders on 25 April 2019 ("2019
AGM"). This represents an increase of 8.8% versus 2017, translating
into a 37.6% payout. If approved, a final dividend of €1.01 per
share will be paid on 8 May 2019, as an interim dividend of €0.59
per share was paid on 9 August 2018. The payment will be subject to
a 15% Dutch withholding tax. The ex-final dividend date for
Heineken N.V. shares will be 29 April 2019.
TRANSLATIONAL CURRENCY CALCULATED IMPACT FOR 2019
Using spot rates as of 8 February 2019 for the remainder of this
year, the calculated positive currency translational impact would
be approximately €60 million at operating profit (beia), and
€40 million at net profit (beia).
EXECUTIVE BOARD COMPOSITION
Mrs. Laurence Debroux will have completed her four-year
appointment term upon conclusion of the 2019 AGM. A proposal for
Mrs. Debroux's reappointment as member of the Executive Board of
Heineken N.V. for a period of four years shall be submitted to the
AGM. Subject to Mrs. Debroux's re-appointment by the AGM, the
Supervisory Board has re-appointed Mrs. Debroux as Chief Financial
Officer.
SUPERVISORY BOARD COMPOSITION
As announced on 18 December 2018, Mr. Hans Wijers, Chairman of
the Supervisory Board, will resign from his positions of Chairman
and member of the Supervisory Board of Heineken N.V. upon
conclusion of the 2019 AGM.
The Supervisory Board and the Executive Board wish to express
their gratitude and appreciation to Mr. Wijers for his valuable
contribution to the company. Mr. Wijers has been a member of the
Supervisory Board for seven years, six of which as Chairman. He has
been actively involved in the continued growth and success of the
company over these years. Mr. Wijers' dedication, significant
business experience and wise counsel have been of great importance
to the company.
The Supervisory Board has resolved to appoint Mr. Jean-Marc
Huët, member of the Supervisory Board since 2014 and Chairman of
the Audit Committee until 31 December 2018, as Chairman of the
Supervisory Board, effective upon conclusion of the 2019 AGM.
Mrs. Marion Helmes has become the Chair of the Audit Committee
per 1 January 2019.
Ms. Yonca Dervisoglu will resign from the Supervisory Board upon
the conclusion of the 2019 AGM. The Supervisory Board is
grateful for Ms. Dervisoglu's commitment and contribution to the
Supervisory Board and its Remuneration Committee over the past
three years.
Also on 18 December 2018, Heineken N.V. announced that it will
propose to the 2019 AGM that Mrs. Rosemary L. Ripley be appointed
as member of the Supervisory Board of Heineken N.V. upon the
conclusion of the 2019 AGM.
On 9 January 2019, Heineken N.V. announced that it will propose
to the 2019 AGM that Mrs. Ingrid-Helen Arnold be appointed as
member of the Supervisory Board of Heineken N.V. upon the
conclusion of the 2019 AGM.
Mr. Michel de Carvalho will have completed his four-year
appointment term upon conclusion of the 2019 AGM. A proposal for
Mr. de Carvalho's reappointment as member of the Supervisory Board
of Heineken N.V. for a period of four years shall be submitted to
the AGM.
ENQUIRIES
Media |
Investors |
John-Paul
Schuirink |
José 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 |
20 February 2019 |
Trading Update for Q1
2019 |
24 April 2019 |
Annual General Meeting
of Shareholders |
25 April 2019 |
Half Year 2019
Results |
29 July 2019 |
Trading Update for Q3
2019 |
23 October 2019 |
Conference call details
HEINEKEN will host an analyst and investor conference call in
relation to its 2018 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 |
National free phone:
+44 (0)20 3003 2666 |
Toll free: (0)800 022
9132 |
Toll free: 0800 109
0700 |
|
|
United States of
America |
|
National free phone: +1
212 999 6659 |
|
Toll free: +1 866 966
5335 |
|
|
|
Participation
password for all countries: Heineken FYR |
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
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. HEINEKEN has a well-balanced
geographic footprint with leadership positions in both developed
and developing markets.We employ over 85,000 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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