Photo: Robert Johnson, Business Insider
AMSTERDAM (AP) â€” Heineken NV, Europe’s largest brewer by sales, reported a fall in profits in 2011 due to rising costs, though the company said growth in developing markets offset some of the pain.The company said Wednesday that its net profit over the year fell 1.4 per cent to euro1.43 billion ($1.88 billion), from euro1.45 billion in 2010. Overall, Heineken booked euro110 million more from one-off costs than gains during 2011.
Revenues grew 6.2 per cent in 2011, boosted by the acquisition in April 2010 of Mexican brands including Sol, Dos Equis and Tecate.
When comparing on a like-for-like basis, excluding recent aquisitions and disposals, Heineken said revenues grew 3.6 per cent. Volume increases accounted for 2.1 per cent of the revenue rise while prices hikes made up the balance.
Operating profit fell 3.5 per cent to euro2.22 billion.
But analysts said the company’s earnings were better than expected and shares rose 4.3 per cent to euro38.14 in Amsterdam trading.
“Earnings in Western Europe have been supported by cost savings,” said analyst Richard Withagen of SNS Security. He noted that the company’s performance was better than it had itself indicated after the first half.
Heineken, which also owns brands such as Newcastle, Foster’s and Amstel, said sales fell in Europe but growth was strong in Asia, Africa and Eastern Europe: A recovery in Russia accounted for around a third of volume growth. One eye-catching detail: Vietnam is now the second-largest market for Heineken-branded beer.
In the U.S., sales of Heineken branded beer shrank but its Mexican brands, notably Dos Equis, grew.
Heineken said it expects costs to rise by 6 per cent in 2012 mostly due to higher malted barley prices. It hopes to absorb the impact by increasing sales and cutting costs, including an unspecified number of employees. In 2011, the company cut 1,134 jobs and employed a little under 70,000 by the year’s end.
Heineken Chief Executive Officer Jean-Francois van Boxmeer said the company’s strategy is to “invest in emerging markets to maintain our growth momentum” while focusing on the marketing and packaging necessary to sell more of its high-margin brands in Europe. Heineken bought the “official beer supplier” concession for the Olympic games in London this summer.
The company said capital spending would increase to euro1.25 billion in 2012 from euro800 million last year, “reflecting investment in additional capacity and the renewal and expansion of its returnable bottle fleet in higher growth markets.”
Heineken proposed a dividend increase of 9 per cent for 2011, to euro0.83 per share.
Heineken is also part owner of the Kingfisher, Tiger and Anchor brands via joint ventures. The family-controlled company reports earnings twice annually.