2018 Half Year Earnings Release - Heineken N.V - Jean-François van Boxmeer, CEO Laurence Debroux, CFO - The HEINEKEN Company
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Heineken N.V.
2018 Half Year
Earnings Release
Jean-François van Boxmeer, CEO
Laurence Debroux, CFO
Amsterdam | July 30, 2018 | Heineken N.V.
1
Disclaimer
This presentation 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 foreign exchange fluctuations, change in tax rates, changes in law,
changes 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 as of the
date of this presentation. HEINEKEN does not undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of these materials.
2
2018 HY Key Highlights
Organic net revenue +5.6% with net revenue per hectolitre +1.1%
Consolidated beer volume +4.5%
Heineken® volume +7.5%
Operating profit (beia) organic growth +1.3% and operating profit margin -118 bps (-76 bps
excluding Kirin)
Net profit (beia) of €1,076 million, up 8.9% organically
Diluted EPS (beia) of €1.89 (2017: €1.82) up 3.8%
In the second half, we expect a continuation of our revenue growth and an acceleration of our
operating profit growth on an organic basis
We now expect the operating profit margin to decrease by approximately 20 bps for the full year
3
Regional Review
2018 HY Organic Growth %
AFRICA,
MIDDLE EAST
HEINEKEN NV AMERICAS ASIA PACIFIC EUROPE
& EASTERN
EUROPE
Consolidated beer volume 4.5 5.6 6.1 13.0 -0.1
Net revenue per hl 1.1 5.2 1.7 -4.4 1.4
Net revenue 5.6 12.2 8.6 8.1 1.1
Operating profit (beia) 1.3 4.3 8.1 2.7 -6.5
4
Heineken ® volume +7.5%
Positive momentum in all regions particularly in AMEE and the Americas
Double digit growth in Brazil, South Africa, Russia, UK, Nigeria, Mexico, Poland and Romania
Heineken® 0.0 is now available in 33 markets and performing strongly
Continued benefit from global sponsorship platforms such as UEFA Champions League® and Formula 1®
5
Strong top line growth
Developing our international brands Building Craft & Variety Leading Low- and no-alcohol innovations
Portfolio grew high single digit Craft & Variety volume was up Double digit growth in Poland,
Volume up double digit for Tiger, double digit. Strong performance of Netherlands, Hungary, Ethiopia and
Krušovice and Desperados international and local propositions Russia
Shaping the cider category Innovating in draught Experimenting in e-commerce
The Sub is available in 11 European initiatives
Continue to invest in B2B and B2C
Double digit growth, particularly
strong in South Africa, Vietnam markets, the USA and China platforms which gain traction across
and Poland The Blade is available in 12 markets markets
6
to increase penetration into small
outlets
Brewing a Better World
Launched a new global Heineken® campaign “When You Drive, Never Drink”
Focus on social pressure around drinking and driving
Empowering people to make the right decisions
“Drop the C” program ambition to grow renewable energy usage to 70% by 2030
Initiated several projects to source wind, solar and biomass energy
For example, in the Netherlands we will install 21,800 solar panels on our
breweries in the next two years
Mexico started operations in the Meoqui brewery, our largest greenfield and our
most advanced in circular economy
7
Financial Overview
Key Financials 2018 HY 2017 HY Total Change (%) Organic Change (%)
€m unless otherwise stated (RESTATED)
Net revenue 10,777 10,342 4.2 5.6
Operating profit (beia) 1,754 1,805 -2.9 1.3
Operating profit (beia) margin 16.3% 17.5% -118bps
Net profit (beia) 1,076 1,036 3.8 8.9
Net profit 950 871 9.1
Diluted EPS (beia) in € 1.89 1.82 3.8
Free operating cash flow 909 746 21.8
Net Debt/EBITDA (beia) ratio 2.5x 2.5x
8
Net Revenue: +5.6% Organic Growth
Organic growth +5.6%
+5.1% +1.1% €m
+4.4%
€m
-6.6%
10,777
10,342
2017 HY Net Revenue Consolidation impact Currency translation Total volume Rev/hl 2018 HY Net Revenue
restated
9Operating Profit (beia): +1.3% Organic Growth
+2.9%
€m +1.3% €m
-7.1%
1,805
1,754
2017 HY Operating profit Consolidation impact Currency translation Organic growth 2018 HY Operating profit
(beia) (beia)
10HY2018 Operating Profit (beia) margin
-118 bps
Main drivers of variation
-42 bps
Consolidation of Kirin Brasil with stronger
17.5% growth than expected
-76 bps
16.3% Input costs per hl increase +3.0% organically,
mainly due to adverse transactional currency
movements impacting packaging costs
Negative translational mix impact from
2017 HY Consolidation Other 2018 HY currencies
restated Brasil Kirin
11FY2018 Operating Profit (beia) Margin update
-20 bps
Revenue growth is expected to continue and
operating profit growth to accelerate in the
+25 bps
second half on an organic basis
Strong performance in Brazil with two effects: In
the first five months, the dilutive impact of the
consolidation of Kirin Brasil was higher than
expected, and for the remainder of the year, the
17.65%
17.4% 17.2% marked acceleration of our combined operations
with an operating margin still below group
average plays negatively on the mix
2017 FY 2018 FY 2018 FY Negative translational mix impact from
restated Expectation Expectation currencies
(Feb 2018) (Jul 2018)
12Diluted EPS (beia) €1.89, +3.8%
+3.8%
€0.04 +€0.16
€1.89
€1.82 -€0.14
2017 HY Diluted EPS (beia) Consolidation impact Currency translation Organic growth 2018 HY Diluted EPS (beia)
13Full Year Outlook
Economic conditions are expected to remain volatile and we assume a negative impact
from currency comparable to 2017
Revenue growth is expected to continue and operating profit growth to accelerate in the
second half on an organic basis
We are updating our operating profit margin guidance for the full year to a decrease of
approximately 20 bps
We expect an average interest rate (beia) broadly in line with 2017 (2017: 3.0%), and an
effective tax rate (beia) of around 28% (2017: 27.6%).
Capital expenditure related to property, plant and equipment should be slightly above €2
billion (2017: €1.7 billion).
1415
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