Heineken refreshing the parts free from recession

THE rising numbers of beer drinkers in Africa, Asia and the Americas are expected to drive growth at Heineken, the world’s third-largest brewer.

Heineken has delivered profits for 2012 which beat market expectations.

Europe’s largest beer maker also told investors and analysts that savings should outweigh rising costs.

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The brewer of Heineken –Europe’s best-selling lager – and Sol, Strongbow and Tiger, said input prices, including malted barley and packaging, would increase only slightly after rising 8.3 per cent last year.

Heineken said it expected to achieve 525m euros of cost savings under its TCM2 programme from 2012-14, with 25m euros of gains from the acquisition of APB now added to its initial target.

It had reached 196m euros of savings by the end of December.

“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,” the company said.

“Last year cost savings were eaten up by input costs.

“This year, with only a slight increase in input costs, they should boost the bottom line,” Bernstein Research analyst Trevor Stirling said. “Some brokers were expecting an earnings miss, with Europe exploding. That did not happen.”

Heineken shares have risen 41 per cent in the past 12 months.

Its net profit before one-off items rose 7.1 per cent to 1.70bn euros ($2.3bn), compared with a forecast for 1.65bn in a poll.

Like-for-like net profit rose 1.6 per cent. Heineken had forecast 2012 profit would be flat on that basis.

After taking full control of Tiger beer maker Asia Pacific Breweries last year, 64 per cent of Heineken’s volume and 59 per cent of its operating profit comes from emerging markets, which places it on a par with rival brewer Anheuser-Busch InBev.

In the Americas, which includes a large Mexican business bought in 2010, Heineken sold 4.2 per cent more beer.

In Africa, where it dominates in Nigeria, volumes rose 3.6 per cent.

Operating profit in the regions rose 7.9 per cent and 9.8 per cent respectively.

In western Europe, where austerity has accelerated a general decline in beer drinking, volume fell two per cent, with operating profit down 6.6 per cent.

Heineken faces a challenge in western Europe in 2013.

Drinking in France, where it is the leading brewer, is likely to be hit by a 160 per cent increase in duty on beer introduced at the start of the year.

In Spain, where it is the second biggest brand in its sector, rising unemployment and austerity measures have cut drinking, particularly in bars and cafes.

“You have a kind of patchy outlook for Europe... Some countries are more resilient than others,” chief executive Jean-Francois van Boxmeer said, adding that premium beers and innovation could still result in higher revenue there.

Heineken owns the John Smith’s brand, which has a brewery in Tadcaster, North Yorkshire.