- Organic revenue +5.7% with revenue per hectolitre up +3.4% 1
- Consolidated beer volume +2.6% with growth in all regions
- Heineken® volume +3.9%
- Operating profit (beia) +11.8% organically and operating margin +34bps 1
- Net profit (beia) of €1,036 million, up 10.5% organically
- Diluted EPS (beia) of €1.82 (2016: €1.71)
- FY expectations unchanged
|Key financials 1,2,3 (in mhl or € million unless otherwise stated)||HY17||HY16||Totalgrowth%||Organicgrowth%|
|Revenue/hl (in €)||91||91||-0.8||3.4|
|Operating profit (beia)||1,805||1,705||5.9||11.8|
|Operating profit (beia) margin||17.2||%||16.9||%||34 bps|
|Net profit (beia)||1,036||977||6.0||10.5|
|Net profit 4||871||586||48.6|
|Diluted EPS (beia) (in €)||1.82||1.71||6.0|
|Free operating cash flow||746||541||37.9|
|Net debt/ EBITDA (beia) 5||2.5||2.4|
- Economic conditions are expected to remain volatile and we continue to assume a negative impact from currency comparable to 2016.
- We expect further organic revenue and profit growth.
- Excluding major unforeseen macro economic and political developments as well as the impact of Brasil Kirin, Lagunitas and the proposed Punch acquisition, we expect continued margin expansion in 2017 in line with the medium term margin guidance of a year on year improvement in operating profit (beia) margin of around 40bps.
- We expect an average interest rate broadly in line with 2016 (2016: 3.1%), and an effective tax rate (beia) also broadly in line with 2016 (2016: 28.3%).
- Capital expenditure related to property, plant and equipment should be slightly below €2 billion (2016: €1.8 billion).
After a slower first quarter given Easter timing, the earlier Tet Vietnamese New Year and tough comparatives, all regions saw higher organic volume growth in the second quarter. Notably Americas and Africa Middle East & Eastern Europe reported organic volume growth in this period after a decrease in the first quarter. Revenue per hectolitre was up organically for the first half across all regions apart from Asia Pacific due to adverse brand mix.Revenue increased 5.7% organically, with a 2.3% increase in total volume and a 3.4% increase in revenue per hectolitre. The underlying price mix impact for the six months was +3.1%. Consolidated beer volume grew 2.6% organically in the first half. Performance was stronger in the second quarter with volume up 4.2% organically, benefiting from Easter timing, good weather particularly in Europe and easier comparatives than in the first quarter.
|Consolidated beer volumes (in mhl)||2Q17||2Q16||Organicgrowth%||HY17||HY16||Organicgrowth%|
|Africa Middle East & Eastern Europe||10.4||10.0||3.2||19.3||19.1||1.5|
|Heineken® volume 1 (in mhl)||2Q17||Organicgrowth%||HY17||Organicgrowth%|
|Africa Middle East & Eastern Europe||1.2||5.9||2.2||4.4|
In the first half, sustainability highlights included linking 13,000 solar panels on the Massafra Brewery to Italy's national grid, with a total capacity of 3.3MW, that covers about 20% of the brewery energy needs. This is the largest solar photovoltaic project installed on a beer brewery worldwide.The Heineken® brand expanded its commitment to dedicate 10% of its media spend to encourage responsible alcohol consumption. The Enjoy Heineken Responsibly commitment now includes every market where the Heineken® brand is sold.The Tiger brand embarked on a global partnership with World Wide Fund for Nature (WWF) starting with a US$ 1 million donation to support the organisation's tiger conservation efforts.NET PROFIT Net Profit (beia) increased 10.5% organically to €1,036 million (2016: €977 million). Reported Net Profit was €871 million (2016: €586 million). In the first half of 2016 for reported Net Profit included an asset impairment of €233 million in the Democratic Republic of Congo (DRC). INTERIM DIVIDEND In accordance with its dividend policy, HEINEKEN fixes the interim dividend at 40% of the total dividend of the previous year. As a result, an interim dividend of €0.54 per share will be paid on 10 August 2017. The shares will trade ex-dividend on 2 August 2017. TRANSLATIONAL CURRENCY CALCULATED IMPACT Using spot rates as at 25 July 2017 for the remainder of the year, the calculated negative currency translational impact would be approximately €155 million at operating profit (beia), and €60 million at net profit (beia). Foreign exchange markets remain very volatile. ACQUISITION OF BRASIL KIRIN HOLDING S.A. On 13 February 2017 HEINEKEN announced that it had entered into an agreement with Kirin Holdings Company, Limited ("Kirin") to acquire Brasil Kirin Holding S.A. ("Brasil Kirin"), one of the largest beer and soft drinks producers in Brazil. The transaction completed on 31 May 2017. On 19 April 2017 HEINEKEN announced that in light of the size and requirements of the proposed future combined portfolio it intended to leverage Kirin's existing route to market with the HEINEKEN portfolio in the future. Since then HEINEKEN Brasil has informed the Coca-Cola bottlers about its decision to terminate the existing distribution, and is currently engaged in discussions.
The acquisition of Brasil Kirin transforms HEINEKEN's business by extending its portfolio and broadening its reach across Brazil. Increased scale and a strengthened brand portfolio will allow the business to accelerate premiumisation particularly with Heineken® and Sol Premium, and enable further growth of the well-established Schin, Bavaria, Kaiser, Amstel and Devassa brands in the mainstream and value segments. The transaction is expected to deliver significant synergies across three main areas: procurement, optimisation of the brewery footprint and logistics, and selling, general and administrative expenses. Consolidated from 1 June, Brasil Kirin is expected to be margin dilutive by c.40bps in 2017. HEINEKEN FY 2017 margin guidance excludes the impact of Brasil Kirin, Lagunitas and the proposed acquisition of Punch. The transaction is expected to cover its cost of capital in Brazil in approximately 5 years.PROPOSED ACQUISITION OF PUNCH On 15 December 2016 HEINEKEN announced that following Vine Acquisitions Limited's announcement of a recommended cash offer for Punch Taverns plc, HEINEKEN through HEINEKEN UK had agreed a back-to-back deal with Vine Acquisitions to acquire Punch Securitisation A ('Punch A'), comprising approximately 1,900 pubs across the UK.On 10 February 2017 Punch Shareholders voted in favour of the Scheme at the Court Meeting and that the special resolution proposed at the General Meeting was passed.The acquisition remains subject to the satisfaction or (where capable of being waived) waiver of the other Conditions set out in the Scheme Document, including the Court sanctioning the Scheme at the Court Hearing. On 27 June 2017, following submission of undertakings offered by HEINEKEN UK in response to address points raised by the CMA in the decision dated 13 June 2017, the CMA announced that there are reasonable grounds for believing that these proposals, or a modified version of them, might be acceptable to remedy the competition concerns it has identified. Subject to being approved by the relevant regulatory authorities, the acquisition is expected to complete by the end of August 2017.
|John-Paul Schuirink||Sonya Ghobrial|
|Director of Global Communication||Director of Investor Relations|
|Michael Fuchs||Chris MacDonald / Aris Hernández|
|Financial Communication Manager||Investor Relations Manager / Analyst|
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|Trading Update for Q3 2017||25 October 2017|
|What's Brewing Seminar, London||11 December 2017|
|Full Year 2017 Results||12 February 2018|
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This press release may contain price-sensitive 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. Attachments: http://www.globenewswire.com/NewsRoom/AttachmentNg/2037d779-eacd-4137-9cc8-8ab24e156c9f