Heineken 2010 beats expectations, driven by cuts

By @ibtimes on

Heineken NV, the world's third-largest brewer, beat market forecasts for 2010 earnings on Wednesday as cost savings more than offset lower beer sales.

Heineken said it expected drinkers in Latin America, Asia and Africa to buy more of its lagers and other drinks this year and said it would mitigate an expected low single-digit percentage increase in input costs with higher prices.

Investors had been keen to hear the Dutch brewer's outlook on rocketing raw material costs, likely to be a hot issue in 2011. The futures price for malting barley has risen 51 percent since the launch of the contract in May last year.

The group, whose chief brands are Heineken and Amstel, Europe's number one and three beers, said it expected European and U.S. consumers to be cautious this year, with an improving economy but higher unemployment and austerity measures.

It added that the premium beer segment, including its Heineken brand in many markets, would outperform the overall beer market.

Rival SABMiller, with a strong presence in faster- growing African and Latin American markets, said last month its lager volumes rose 3 percent in the final three months of 2010.

Heineken, for whom western Europe made up over half of revenues in 2009, suffered a group volume decline on a like-for-like basis of 3.1 percent in 2010.

Heineken's purchase of the beer business of Mexico' FEMSA

is set to boost its operating profit from more buoyant emerging markets to 40 percent from 32 percent as well as securing brands Dos Equis, Tecate and Sol.

The Dutch brewer's net profit before one-offs rose by 37 percent last year to 1.45 billion euros ($1.96 billion), against the average 1.38 billion euros expected in a Reuters poll of 11 brokers.

On a like-for-like basis, the increase was 19.7 percent. Heineken had forecast a rise of at least a low double-digit percentage.

Operating profit before one-offs rose by 25 percent, or 8.6 percent on a like-for-like basis, to 2.61 billion euros, compared to a consensus forecast of 2.47 billion euros.

The company delivered 280 million euros of savings under its total cost management program, as well as 42 million euros in synergy savings from its Mexican takeover.

World number four Carlsberg reports full-year figures on February 21, market leader Anheuser-Busch InBev on March 3. SABMiller, with a financial year running to the end of March, will report full-year earnings on May 18.

(Editing by Rex Merrifield; Editing by Hans Peters)

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