Heineken, the world's fourth-largest brewer, on Wednesday brushed off the impact of a fine imposed for alleged market-rigging, as it reported first-half gains in the profitable premium beer market.
Overall volumes of higher priced or imported beers rose 11 per cent, outpacing worldwide premium segment growth, which is running at twice the rate of growth of the mainstream beer market.
Jean-François van Boxmeer, chief executive, noted further opportunities for Heineken in the burgeoning Latin American market.
One blemish on the performance was Heineken premium light, a low calorie and low carbohydrate beer, that will not turn a profit in 2007 in the US, where it was launched last year.
While volumes rose 30 per cent in the first half, Heineken admitted it had been “a little too bullish” in setting a goal of selling 1m hectolitres, blaming the weather and higher prices.
It added that the Heineken premium light had hurt Amstel light, with US sales of that brand down 10 per cent. Heineken said it had put a team to work to "revitalise the [Amstel light] franchise" in the US but would not abandon what remained a profitable product.
Net profit, excluding one-off items and amortisation of brands, rose 33.6 per cent to €548m. Group operating profit, on the same basis, rose 25 per cent to €906m, boosting Heineken's profit margin by 210 basis points to 14.8 per cent.
Heineken has 150 cost savings initiatives running, ranging from brewery closures to out-sourcing. It has found 42 per cent of a targeted €450m in costs savings under a three-year plan.
Approaching half the operating profit growth came from central and eastern Europe, Asia and Africa, lessening the company’s reliance on mature western European regions.
Mr van Boxmeer said that, although there would be bolt-on acquisitions, such as those recently made in Vietnam and the Czech Republic, organic growth was the main focus. In July Heineken doubled its full-year forecast for organic net profit growth to 20-25 per cent.
Heineken, in common with other brewers, faces soaring malt costs, the result of poor harvests and demand from emerging markets and for biofuels production. It said it would offset an 8 per cent annual rise in raw material and packaging costs this year by lifting beer prices.
A €219.3m fine imposed in April by the European Commission – which found Heineken and two other Dutch brewers guilty of operating a cartel in the Netherlands in the late 1990s – slashed net profit 30 per cent to €302m. Heineken has appealed but it could be 2010 before the matter is resolved, said Mr van Boxmeer.
Hei neken shares slipped 77 cents to €44.63.