Heineken Holding N.V. reports strong organic net profit growth of 23% for 2007

Amsterdam, 20 February 2008. Heineken Holding N.V. announced today a 23% organic growth in net profit for the twelve months to end December 2007. This performance is in line with Heineken's forecast published in August 2007.

 

Net profit (beia) for 2007 amounted to EUR 1,119 million with EBIT (beia) growing 20% organically to EUR 1,846 million. Once again, Heineken was able to drive growth in all key metrics across virtually all regions.

 

At the Annual General Meeting of Shareholders of Heineken N.V. in April 2008, Heineken N.V. will propose a 17% increase in dividend for 2007 to EUR0.70 per share (2006: EUR 0.60).

 

For 2008, Heineken expects another year of positive organic net profit growth driven by the shift towards premium beer, strong consumer demand for its brands, improved pricing and a continued focus on cost control.

 

 

 

 

 

 

 

 

Heineken Holding N.V. engages in no activities other than its participating interest in Heineken N.V. and the management and supervision of and provision of services to that company.

 

 

Heineken expects 2008 to be another year of positive organic growth in net profit, based on a further improvement in sales mix, better prices, higher beer volumes and savings in fixed costs. The international premium segment will continue to grow at a higher rate than that of the overall beer market and the Heineken brand will benefit from this trend. In its third and final year, the Fit 2 Fight cost savings programme is expected to deliver approximately EUR 150 million of gross costs savings, delivering in full the F2F programme launched at the beginning of 2006.

 

As a result of worldwide input cost inflation, Heineken expects a 15% price increase in its raw material and packaging costs. Heineken expects that it will be able to fully pass on the impact of the increased input and energy costs in most of its markets. Due to the uncertainties around the possible impact of worldwide consumer price inflation and the effect of weakening economies on consumer spending and beer consumption, it is too early to make a reliable estimate of volume levels for 2008.

 

Heineken expects capital expenditure related to property, plant and equipment to total approximately EUR 1.2 billion in 2008. Part of this investment is related to capacity expansion and the construction of new breweries in Central & Eastern Europe, Asia and Africa. Capital expenditures will be financed mainly from cash flow.

The total restructuring costs associated with the Fit 2 Fight saving programme is expected to amount to approximately EUR 225 million, of which an estimated EUR 75 million will relate to 2008. As a result of cost-reduction programmes, the underlying downward trend in the number of employees will continue.

 

In the event of a successful offer for Scottish & Newcastle, Heineken's share of the assets will be consolidated for the first-time when the transaction becomes effective.

 

 

On 25 January 2008, Sunrise Acquisitions Limited (a newly incorporated company jointly owned by Heineken N.V. and Carlsberg A/S) and Scottish & Newcastle plc (S&N) announced that they had reached agreement on the terms of a recommended cash offer of 800 pence per S&N share. It is intended that the acquisition will be implemented by means of a court-sanctioned scheme of arrangement.

 

Following completion of the acquisition, which is expected to take place in the second quarter of 2008, S&N's share of BBH, as well as the French, Greek, Chinese and Vietnamese operations will be transferred to Carlsberg. Heineken will continue to hold the remaining businesses, principally the United Kingdom and Ireland, Portuguese, Finnish, Belgian, the United States and Indian operations.

 

For Heineken, the intended acquisition represents a significant strategic step that will create strong platforms for growth. It is anticipated that the acquisition will provide extensive new distribution and portfolio platforms in the United Kingdom and other markets to drive premium Heineken brand growth. In Western Europe, where Heineken has increased profitability consistently, year after year, Heineken will acquire number 1 (in the United Kingdom) and number 2 (Portugal, Ireland, Finland and Belgium) market positions in stable, profitable markets. The acquisition will also add attractive brands such as Newcastle Brown Ale, Foster's, John Smith's Bitter and Strongbow cider to Heineken's brand portfolio.

 

The enterprise value of the relevant assets amounts to EUR 6.1 billion. The acquisition will be entirely financed with debt and committed financing is in place.

 

At the Annual General Meeting of Shareholders on 17 April 2008, shareholders of Heineken N.V. and Heineken Holding N.V. will be asked to approve the acquisition. Heineken N.V.'s and Heineken Holding N.V.'s controlling shareholder provided irrevocable undertakings to vote in favour of the transaction. The transaction will also require court, regulatory and S&N shareholders' approval.

 

  

 

The Annual General Meeting of Shareholders of Heineken N.V. on 17 April 2008 will be asked to approve the distribution of an increased cash dividend of EUR 0.70 (2006: EUR 0.60) per share of EUR 1.60 nominal value. This represents a dividend pay out ratio of 30.5% in line with Heineken's dividend policy. As an interim dividend of EUR 0.24 per share was paid on 20 September 2007, the final dividend will be EUR 0.46 per share, subject to the 15% Dutch withholding tax.

If Heineken N.V. shareholders approve the proposed dividend, Heineken Holding N.V. will, according to its articles of association, pay an identical dividend per ordinary share. A final dividend of EUR 0.46 per ordinary share of EUR 1.60 nominal value will be payable on 25 April 2008. Heineken Holding N.V. shares will be quoted ex-dividend on 21 April 2008.