Bloomberg News

Heineken Revenue Beats Estimates as European Decline Slows

October 26, 2011

(Updates with closing share price in 8th paragraph.)

Oct. 26 (Bloomberg) -- Heineken NV, the world’s third- biggest brewer, reported revenue growth that beat estimates as ad campaigns helped curb a decline in sales in western Europe.

So-called organic revenue rose 3 percent in the third quarter, the Amsterdam-based company said today. The median estimate of nine analysts surveyed by Bloomberg News was for a decline of 1.5 percent.

Shipments slid 1.7 percent in western Europe, less than the 4 percent median estimate of five analysts. Heineken said in August it would increase its marketing expenditure in the second half to support its brands. The brewer said “unusually poor” weather in July and August weighed on sales, after SABMiller Plc, a larger competitor, last week reported revenue that missed estimates on the same reason.

“The top-line performance has been very impressive,” Melissa Earlam, an analyst at UBS AG in London, said today. “It’s clearly a beat.”

Heineken started a new global advertising campaign in the first quarter of 2011 under the slogan "Open Your World," with commercials appearing on televisions, cinema screens and online. The campaign supported the Heineken brand in countries including the U.K., Mexico, Brazil, Chile, Nigeria, South Africa, Vietnam and Taiwan, the brewer said today.

Heineken is among brewers which have suffered as consumer confidence wanes in western Europe, where it made almost half its revenue last year.

Russia Rebound

Russia, the world’s fourth-biggest beer market, had a “strong” rebound in volume compared with last year when the government raised taxes on beer by 200 percent, Heineken said.

Heineken rose 0.8 percent to 35.75 euros at the close of Amsterdam trading.

Earnings before interest and taxation, excluding acquisitions and some items, fell in the quarter as higher promotional spending and an increase in input costs failed to offset increased revenue and cost-cutting measures, the brewer said.

Heineken said third-quarter net income was 525 million euros ($731 million), compared with 520 million euros the brewer previously reported for the year-earlier period.

’Broadly’ In Line

The Amstel brewer cut its expectations for earnings in August, saying it expected so-called organic adjusted net income to be “broadly” in line with last year. The company reaffirmed that forecast today.

The volume of the Heineken brand in the international premium segment rose 4 percent in the quarter.

The amount of beer sold rose in Africa, the Middle East and central and eastern Europe, the company said, as well as the Americas.

“Europe remains, from a consumer perspective, an uncertain place,” Chief Financial Officer Rene Hooft Graafland said today on a conference call. “A lot will depend on what sort of measures will be taken.”

European leaders are meeting today for an emergency summit on the debt crisis.

Heineken’s definition of organic sales excludes acquisitions and disposals.

--Editors: Thomas Mulier, Paul Jarvis

To contact the reporter on this story: Clementine Fletcher in London

To contact the editor responsible for this story: Celeste Perri at

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