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Heineken Holding N.V. 2012 Full Year results: continued growth in an exciting year


February 13, 2013 - London

Amsterdam, 13 February 2013 - Heineken Holding N.V. today announced: 

  • The net result of Heineken Holding N.V.'s participating interest in Heineken N.V. for 2012 amounts to €1,477 million;
  • Revenue increase of 7.4% to €18.4 billion (organic growth +3.9% consisting of total consolidated volume growth of 1.5% and increased revenue per hl of 2.4%);
  • Group beer volume grew 2.8% organically, with growth in 4 out of 5 regions, driving a gain in global market share;
  • Strong Heineken® brand performance with volume growth of 5.3% in the international premium segment, further extending global segment leadership;
  • EBIT (beia) broadly in line with prior year, on an organic basis, reflecting upfront spend on business capability building and higher input costs;
  • Following acquisition of APB and APIPL, HEINEKEN derives 64% of consolidated beer volume and 59% of EBIT (beia) from emerging markets (on a 2012 pro forma basis);
  • Net profit of Heineken N.V. more than doubled to €2.9 billion owing to a non-cash exceptional gain of €1.5 billion, related to revaluation of previously held equity interest in APB and APIPL;
  • Net profit (beia) grew 1.6% organically, reflecting the benefit of a lower effective tax rate (beia) and lower organic interest expense;
  • TCM2 delivered pre-tax savings of €196 million;
  • Free operating cash flow of €1.5 billion and a cash conversion ratio of 80% reflects higher capital investment to drive future growth; and
  • Proposed total 2012 dividend of €0.89 per ordinary share, an increase of 7.2% (2011:€0.83).
Key figures[1]
(in mhl or € million unless stated otherwise)
  Full Year
2012
  Full Year
2011
  Change %  Organic 
  growth %
Group beer volume 221.2 213.9 3.4 2.8
Total consolidated volume 202.0 194.4 3.9 1.5
Of which: Consolidated beer volume 171.7 164.6 4.3 2.4
Heineken® volume in premium segment     29.1     27.4 6.2 5.3
Revenue 18,383 17,123 7.4 3.9
EBIT 3,904 2,455 59
EBIT (beia)[2] 2,912 2,697 8.0 -0.5
Net profit (beia) 1,696 1,584 7.1 1.6
Net profit of Heineken Holding N.V. 1,477    717 106
Free operating cash flow 1,484 2,093 -29
Net debt/EBITDA (beia)[3]     2.8x     2.2x
EPS (in €)   5.13   2.49 106

[1] For an explanation of the terms used please refer to the Glossary in the Appendix. Unless otherwise stated, any reference to growth rates used throughout the report is calculated on an organic basis and volume relates to group beer volume.
[2] APB and APIPL no longer report with a 3-month delay. For comparison purposes, the EBIT (beia) organic growth calculation is based on 12 months of APB and APIPL share of net profit of Heineken N.V., assuming HEINEKEN's joint venture share of 41.9% of APB and APIPL from the beginning of the year is maintained. This includes corrections for accounting changes and fair value adjustments. The 3-month period from 15 August to 14 November 2012 is excluded from the calculation of organic volume and EBIT growth.
[3] 2012 includes APB and APIPL on a 12 month combined pro forma basis; 2011 includes the Galaxy Pub Estate on a 12 month pro forma basis.

Heineken Holding N.V. engages in no activities other than its participating interest in Heineken N.V. and the management and supervision of and provision of services to that company.

2013 FULL YEAR OUTLOOK

Top-line: HEINEKEN anticipates continued volume and revenue growth momentum in 2013. 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. However, HEINEKEN will continue to seek opportunities in Europe to drive positive price and sales mix.

Global brands: The Heineken® brand is expected to continue to outperform the international premium segment and overall beer market in 2013 by further leveraging HEINEKEN's global marketing scale, superior brand campaigns and strong execution in the marketplace. In 2013, the continued growth and planned roll-out of HEINEKEN's other premium global brands - Desperados, Strongbow Gold, Amstel Premium Pilsner and Sol - are expected to support top-line development.

Marketing and selling expenses: HEINEKEN expects marketing and selling (beia) expense as a percentage of revenue to remain broadly stable, reflecting improved marketing spend effectiveness from increased global scale (2012: 12.2%).

Input costs: HEINEKEN forecasts a slight increase in input cost prices (excluding the effect of currency translation).

Total Cost Management 2 (TCM2): HEINEKEN now expects to realise €525 million of cost savings under the TCM2 programme covering the period 2012-2014 (previously €500 million). The increase of €25 million reflects identified cost synergies under the acquisition of Asia Pacific Breweries (APB) and Asia Pacific Investment Pte Ltd (APIPL).

HEINEKEN expects to incur approximately €100 million of further upfront GBS (Global Business Services) costs through to the end of 2014 (with around two thirds of this spend expected in 2013).

As a result of on-going productivity initiatives, HEINEKEN expects an organic decline in the number of employees in 2013.

Effective tax rate: HEINEKEN expects the effective tax rate (beia) in 2013 to be in the range of 27% to 29% (2012: 26.5%). The higher tax rate can be primarily explained by the result of favourable outcomes with tax authorities in 2012 and the full year consolidation of APB and APIPL in 2013 which is subject to a higher effective tax rate.

Interest rate: HEINEKEN forecasts an average interest rate of around 4.5% in 2013 (2012: 5.4%) reflecting lower coupons on bond issuances in 2012.

Cash flow: Cash flow generation is expected to remain strong, further reducing the level of net debt. In 2013, capital expenditure related to property, plant and equipment is forecast to be €1.5 billion (2012: €1.2 billion) primarily reflecting the consolidation of APB and continued investment in higher growth markets to capture anticipated top-line growth. Increased investments in 2013 will be focused on brewing capacity expansions, the upgrading of existing production facilities and new commercial equipment. As a consequence, HEINEKEN expects a cash conversion ratio of below 100%in 2013.

Acquisition of APB and APIPL: The acquisition of APB and APIPL is expected to be marginally EPS accretive in the first year.

Total dividend for 2012

The Heineken N.V. dividend policy is to pay out a ratio of 30% to 35% of full-year net profit (beia). The payment of a total cash dividend of €0.89 per share of €1.60 nominal value for 2012 (total dividend 2011: €0.83) will be proposed to the annual meeting of shareholders of Heineken N.V. If approved, a final dividend of €0.56 per share will be paid on 8 May 2013, as an interim dividend of €0.33 per share was paid on 4 September 2012. The payment will be subject to a 15% Dutch withholding tax.

If Heineken N.V. shareholders approve the proposed dividend, Heineken Holding N.V. will, according to its articles of association, pay an identical dividend per ordinary share. A final dividend of €0.56 per ordinary share of €1.60 nominal value will be payable on 8 May 2013. The ex-final dividend date for Heineken Holding N.V. shares will be 29 April 2013.

Investor Calendar Heineken Holding N.V.
What's Brewing Seminar, London 25 March 2013
Trading update for Q1 2013 24 April 2013
Annual General Meeting of Shareholders (AGM) 25 April 2013
What's Brewing Seminar (location to be determined) 28 June 2013
Half Year 2013 Results 21 August 2013
What's Brewing Seminar, New York 6 September 2013
Trading update for Q3 2013 23 October 2013
Financial Markets Conference, Mexico 5-6 December 2013
Press enquiries Investor and analyst enquiries
John Clarke George Toulantas
Head of External Communication Director of Investor Relations
E-mail: john.g.clarke@heineken.com Lucia Bergamini
John-Paul Schuirink Senior Investor Relations Manager
Financial Communications Manager E-mail: investors@heineken.com
E-mail: john-paul.schuirink@heineken.com Tel: +31-20-5239590
Tel: +31-20-5239355

Editorial information:
HEINEKEN is a proud, independent global brewer committed to surprise and excite consumers with its brands and products everywhere. The brand that bears the founder's family name - Heineken® - is available in almost every country on the globe and is the world's most valuable international premium beer brand. HEINEKEN's aim is to be a leading brewer in each of the markets in which it operates and to have the world's most valuable brand portfolio. HEINEKEN wants to win in all markets with Heineken® and with a full brand portfolio in markets of choice. HEINEKEN is present in over 70 countries and operates more than 165 breweries with volume of 221 million hectoliters of group beer sold. HEINEKEN is Europe's largest brewer and the world's third largest by volume. HEINEKEN is committed to the responsible marketing and consumption of its more than 250 international premium, regional, local and specialty beers and ciders. These include Heineken®, Amstel, Anchor, Biere Larue, Bintang, Birra Moretti, Cruzcampo, Desperados, Dos Equis, Foster's, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Strongbow, Tecate, Tiger and Zywiec. HEINEKEN's leading joint venture brands include Cristal and Kingfisher. Pro forma 2012 revenue totaled €19,765 million and EBIT (beia) € 3,151 million. The number of people employed is over 85,000. Heineken N.V. and Heineken Holding N.V. shares are listed on the Amsterdam stock exchange. Prices for the ordinary shares may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on the Reuter Equities 2000 Service under HEIN.AS and HEIO.AS. Most recent information is available on HEINEKEN's website: www.theHEINEKENcompany.com.

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, 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 are only relevant as of the date of this press release. HEINEKEN does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of these statements. 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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Source: HEINEKEN Holding NV via Thomson Reuters ONE

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