Emerging markets help Heineken to weather slowdown

Daniel Craig in Skyfall, whose sponsorship boosted Heineken. Picture: AP
Daniel Craig in Skyfall, whose sponsorship boosted Heineken. Picture: AP
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Heineken has shrugged off surging raw material costs to post higher profits in emerging markets, off-setting difficult conditions in austerity-hit areas like Britain, the Dutch brewer revealed yesterday.

Heineken, which with Denmark’s Carlsberg carved up
Edinburgh-based Scottish & Newcastle in 2008, also said it was on course to achieve €525 million (£454m) of cost savings between 2012 and 2014.

It had made €196m of savings by December. Employee numbers at the UK business that Heineken acquired from S&N have fallen since the takeover from 4,600 to 2,400, including UK brewery closures, back office and Edinburgh HQ cuts, and the sale of the Waverley TBS wholesaling business.

The company, the world’s third-biggest brewer and the UK’s biggest, said: “The higher growth regions of Africa, Latin America and Asia Pacific are expected to more than offset volume weakness in European markets affected by continued economic uncertainty and government-led austerity measures.”

Heineken, whose products include the eponymous lager brand, Kronenbourg 1664 and John Smith’s ale, said its beer volumes rose 3.4 per cent in 2012, with the Heineken brand up 5.3 per cent after it sponsored the James Bond film Skyfall.

Its underlying profits rose 7 per cent to €1.7 billion, while revenues were up 7.4 per cent at €18.4bn. The group said that, following its recent acquisition of Asia Pacific Breweries, nearly two thirds of its revenues and just under 60 per cent of underlying earnings comes from emerging markets.

Heineken said it expected input prices, including malted barley and packaging, would only edge up in 2013 after surging over 8 per cent last year.

Jean-Francois van Boxmeer, chief executive of Heineken, said a key event of 2012 was “acquiring full control of Asia Pacific Breweries, significantly expanding our exposure to growth markets” as the European environment remained challenging.

The group’s total 2012 dividend rises 7.2 per cent to €0.89 cents from €0.83 cents last time.