Heineken Sees Big Rise For Year

Investors have welcomed forecasts by Heineken, the Dutch brewer, of an increase in net profits of well above 10 per cent for the full year. In spite of a flat European beer market, where Heineken makes about 70 per cent of its turnover, the company yesterday reported an 11 per cent sales increase to Fl 6.5 billion (£2 billion) in the first half, with net profits rising 9.8 per cent to Fl 326 million. About 6 per cent of the sales growth was attributed to the consolidation of Birra Moretti of Italy and Zlaty Bazant of Slovakia, bought last year. Heineken, the worlds second-largest brewer, further benefited from the strength of the dollar against the guilder and stronger sales in the higher-margin premium segment. Fridays results were well above expectations, triggering a sharp rise in the shares in Amsterdam, which closed up Fl 17.50 or 5.5 per cent at Fl 334.50. At the same time last year the company saw its shares plummet after it warned of lower full-year profits, which eventually came in 1.4 per cent down at Fl 655 million. It seems that Heineken is feeling guilty about deflating its profits last year, said John Wakely, analyst at Lehman Brothers. Then again, you would have to be a psychiatrist to find out what is going on at Heineken. FT

 

Karel Vuursteen, Heineken chairman, said the brewer would continue to invest in the emerging markets of Asia, Latin America and eastern Europe, but it was also eager to strengthen its position in the saturated European market. He confirmed that Heineken would invest about FFr180m (£18.6m) to upgrade the French Fischer/Adelshoffen breweries which it bought last year. The rosy forecast for the year was prompted by strong sales in August, which was hotter than usual, and lower costs for packaging and raw materials. Mr Vuursteen said that, in the short term at least, the Asian currency crisis should not have a significant impact on sales in the region. David Hazelwood, finance director, said the US should again be Heinekens most profitable market this year. Though US sales had fallen slightly at the beginning of this year, they started rising again in summer, and the company was pleased with the launches of offshoots of the main Amstel brand. Mr Vuursteen also denied rumours that Heineken was interested in buying Grolsch, its fellow Dutch brewer. There was absolutely not a chance that Heineken would be allowed by competition authorities in Brussels to swallow Grolsch. Such a deal would give the merged entity a market share of roughly 70 per cent in the Netherlands, he said. Copyright Financial Times Limited 1997. All Rights Reserved.