Heineken N.V. reports 2017 full year results

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Overig advies 12/02/2018 07:18
Amsterdam, 12 February 2018 - Heineken N.V. (EURONEXT: HEIA; OTCQX: HEINY) announces:

Organic revenue (beia) +5.0% with revenue (beia) per hectolitre +2.1%
Consolidated beer volume +3.0% with growth in all regions
Heineken® volume +4.5%
Operating profit (beia) organic growth of +9.3%; operating margin (beia) expansion of +40 bps excluding the Brasil Kirin, Punch and Lagunitas acquisitions
Net profit (beia) of €2,247 million, +9.3% organically
Diluted EPS (beia) +7.0% to €3.94
Proposed 2017 total dividend +9.7% at €1.47 per share

Jean-François van Boxmeer, Chairman of the Executive Board / CEO, commented:

"We delivered strong results in 2017, with all regions contributing to organic growth in volume, revenue and operating profit. The Heineken® brand performed very well and Heineken® 0.0 was launched in 16 countries. During the year, we became the second largest beer company in Brazil with the acquisition of Brasil Kirin, we bought 1,900 pubs from Punch Taverns in the UK and acquired full ownership of Lagunitas, where we strongly believe in the expansion of the brand as an IPA of reference outside its core US market. We also made good progress with our sustainability agenda. We have already surpassed our 2020 CO2 emissions target and we have set new ambitious objectives for 2030 with our 'Drop the C' programme.

We expect the environment will continue to be marked by volatility and uncertainty. We are committed to long-term value creation and will continue to strive for superior top line growth whilst working on improving our operating profit margin. In the coming years, we expect this to be driven by Heineken® as well as our portfolio of international brands, craft & variety, low & no-alcohol and cider, with a focus on premiumisation, combined with revenue and cost management initiatives. For 2018, excluding major unforeseen macro economic and political developments, we expect to deliver an operating profit margin expansion of around 25bps[1]. This includes a residual dilutive effect on margins from the acquisition of Brasil Kirin, whose integration and results are very encouraging."

Key financials[2]
FY17 FY16 Total growth Organic growth
(in mhl or € million unless otherwise stated % %
Revenue (beia) 21,908 20,792 5.4 5.0
Revenue 21,888 20,792 5.3
Revenue (beia) per hl (in €) 87 91 -4.6 2.1
Operating profit (beia) 3,759 3,540 6.2 9.3
Operating profit (beia) margin 17.2% 17.0% 14bps
Net profit (beia) 2,247 2,098 7.1 9.3
Net profit 1,935 1,540 25.6
Diluted EPS (beia) (in €) 3.94 3.68 7.0
Free operating cash flow 2,031 1,773 14.6
Net debt / EBITDA (beia)[3] 2.5 2.3

1 Excluding the one-time benefit of the implementation of IFRS 15 as of 1 January 2018.

2 Consolidated figures are used throughout this report, unless otherwise stated; please refer to the Glossary section for an explanation of non-GAAP measures and other terms used throughout this report.

3 Includes acquisitions and excludes disposals on a 12 month pro-forma basis.


Economic conditions are expected to remain volatile and we have assumed a negative impact from currency comparable to 2017.
We expect further organic revenue and profit growth.
Excluding major unforeseen macro economic and political developments we expect to deliver an operating profit margin expansion of around 25 bps. This includes a residual dilutive effect from the acquisition of Brasil Kirin and excludes the one-time benefit of IFRS 15 implementation.
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).

The good performance in the first half continued during the second part of the year. Revenue (beia) per hectolitre continued to improve organically in all regions, excluding Asia Pacific due to negative mix effects. Full year operating profit (beia) increased 9.3% organically, a slightly lower pace than the first part of the year (1H17: 11.7%) as our commercial investments increased during the second half as planned.

HEINEKEN continued to invest in key developing markets with the expansion of production capacity in Mexico, Cambodia, Vietnam, Ethiopia and Haiti, the opening of a new brewery in Ivory Coast and the announcement of the construction of a new brewery in Mozambique.

Revenue (beia) increased 5.0% organically, with a 2.9% increase in total volume and a 2.1% increase in revenue (beia) per hectolitre. In 2017 the underlying price mix impact was 2.5%. In the second half revenue (beia) increased 4.3% (1H17: 5.7%), with volume growth of 3.5% (1H17: 2.3%), revenue (beia) per hectolitre was up 0.8% (1H17: 3.4%) and underlying price mix impact of 1.7%. Reported revenue (beia) per hectolitre declined -4.6% mainly due to the dilutive effect of the acquisition of Brasil Kirin.

Consolidated beer volumes
(in mhl) 4Q17 Organicgrowth % FY17 Organic growth %
Heineken N.V. 56.7 4.6 218.0 3.0
Africa, Middle East & Eastern Europe 10.6 7.2 40.1 4.8
Americas 21.8 4.6 72.1 3.3
Asia Pacific 7.6 10.6 27.0 8.9
Europe 16.8 0.6 78.8 0.2

Consolidated beer volume grew 3.0% organically in 2017, with 2.6% growth in the first half and 3.5% growth in the second half. Beer volume in the fourth quarter was up 4.6%, an acceleration versus the 2.5% volume growth delivered in the third quarter due to positive volume growth in Europe and accelerated growth in the Americas.

Heineken® volume
(in mhl)
4Q17 Organic growth % FY17 Organic growth %
Heineken® volume 9.2 6.9 36.0 4.5
Africa, Middle East & Eastern Europe 1.6 18.7 5.2 12.8
Americas 3.0 12.0 10.7 9.5
Asia Pacific 1.6 -5.3 6.3 -5.9
Europe 3.0 3.9 13.8 3.1

Heineken® volume grew 4.5%, one of the brand's strongest performances in recent years, with positive volume performance across all regions apart from Asia Pacific. Volume grew double digit in Brazil, South Africa, Russia, Mexico and Romania. The brand also saw healthy growth across European markets including Italy, Spain, France and the Netherlands benefiting from the steady growth of Heineken® Lager as well as the launch of Heineken® 0.0 during the year. These results more than offset weaker volumes in Vietnam, China and the US. Heineken® continues to benefit from global platforms such as UEFA Champions League and Formula 1®.

Heineken® Light grew high single digit driven by launches in Mexico, Indonesia, Poland, Greece and Switzerland and continued growth in Australia, offsetting softer volume in the US.

Heineken® 0.0 is available in 16 markets and is delivering ahead of expectations. Further roll-out is planned for 2018. Heineken® 0.0 is also at the heart of our 'When you drive, never drink' campaign together with our sponsorship of Formula 1®.

The international brand portfolio grew high single digit. Volume was up double digit for Tiger, Krušovice and Birra Moretti. Tecate, Desperados and Red Stripe also delivered robust volume growth during the year. Amstel volume was flat with the decline in Nigeria and Greece offset by strong growth in Brazil. Sol declined mid single digit as the high single digit growth outside of Mexico was offset by lower domestic volume.

Cider volume increased low single digit to 4.9 million hectolitres (2016: 4.8 million). Good progress was made with our global cider strategy and volume outside the UK was up double digit, driven by the strong growth in South Africa, Poland, Romania and Vietnam. This offset a high single digit decline in the UK, where volumes were impacted by a partial delisting.

Low & No-Alcohol (LNA) volumes increased low single digit, delivering 12.5 million hectolitres in 2017 (2016: 12.4 million). Continued robust growth of Radler and the launch of Heineken® 0.0 contributed to Europe's double digit volume growth. Volumes in Nigeria and Egypt were adversely impacted by the weaker macro economic environment and consumer sentiment.

Craft & Variety volume grew double digit supported by the strong performance of the international craft beers as well as local craft propositions. In particular, Affligem and Mort Subite in France, and Lagunitas both in the UK and US contributed to category growth.

Among the innovations of 2017 was the launch of The Blade, a countertop draught system for small outlets. Launched in 11 markets in the second half of the year, this innovation is showing promising early results. HEINEKEN also launched new e-commerce initiatives for both Business-to-Business and Business-to-Consumer platforms, such as Beerwulf which is our new Craft & Variety online business channel for consumers.

Operating profit (beia) grew 9.3% organically, primarily reflecting higher revenue and cost efficiencies.

HEINEKEN strongly believes that by fully integrating sustainability into the way we do business, we are best placed to make a meaningful positive impact on the world around us. HEINEKEN continues to make significant progress in achieving its Brewing a Better World commitments.

Highlights included decreasing average water consumption in water-stressed areas to 3.2 litres of water per litre of beer (2014: 3.8). Global average water consumption remained stable compared to last year, and decreased 29% compared to 2008, the baseline year for the 2020 commitments. 28% of main raw materials came from sustainable sources (2016: 17%). 10% of total Heineken® media spend was dedicated to responsible consumption campaigns, in more than 70% of operating companies in scope.

HEINEKEN has now surpassed its 2020 target for CO2 emissions by reaching 6.1 kg CO2 e/hl, down from 6.5 kg CO2 e/hl in 2016 (a 41% decline since 2008). Emissions decreased in absolute terms as well: even though production volumes were 57% higher than in 2008, emissions were 7% lower. Today HEINEKEN announced its 2030 vision for renewable energy and is setting a new ambition to reduce carbon emissions.


Net profit (beia) increased 9.3% organically to €2,247 million (2016: €2,098 million).

The impact of exceptional items and amortization of acquisition-related intangibles (eia) on net profit was €312 million (2016: €558 million). In 2016 exceptionals included an asset impairment in the Democratic Republic of Congo (DRC) of €286 million.

Net profit after exceptional items and amortization of acquisition-related intangibles was €1,935 million (2016: €1,540 million).

The Heineken N.V. dividend policy is to pay out a ratio of 30% to 40% of full year net profit (beia). For 2017, payment of a total cash dividend of €1.47 per share (2016: €1.34) will be proposed to the Annual General Meeting of Shareholders (AGM) on 19 April 2018. This represents an increase of 9.7% versus 2016, translating into a 37.3% payout. If approved, a final dividend of €0.93 per share will be paid on 2 May 2018, as an interim dividend of €0.54 per share was paid on 10 August 2017. The payment will be subject to a 15% Dutch withholding tax. The ex-final dividend date for Heineken N.V. shares will be 23 April 2018.


Using spot rates as at 7 February 2018 for the remainder of this year, the calculated negative currency translational impact would be approximately €190 million at consolidated operating profit (beia), and €105 million at net profit (beia). Foreign exchange markets remain very volatile.

Mr. J.A. Fernández Carbajal, Mr. J.G. Astaburuaga Sanjiinés, Mr. J.M. Huët, and Mrs. A.M. Fentener van Vlissingen will have completed their four-year appointment terms per the end of the AGM on 19 April 2018.

Mr. Huët is eligible for reappointment for a period of four years and a non-binding nomination shall be submitted to the AGM in this respect. A non-binding nomination for the reappointment of Mr. Fernández Carbajal and Mr. Astaburuaga Sanjiinés for a period of four years shall also be submitted to the AGM. Both are representatives of FEMSA (that (in)directly holds a 14.76% economic interest in the Company), and their respective appointments are based on the Corporate Governance Agreement, which was concluded between (among others) the Company and FEMSA on 30 April 2010, and which was approved by the AGM on 22 April 2010 (in connection with the acquisition by the Company of FEMSA's beer activities).

The Supervisory Board is grateful for the commitment of Mrs. Fentener van Vlissingen over the past twelve years and for her meaningful contribution to the Supervisory Board, as well as its Audit Committee and Selection and Appointment Committee.

A non-binding nomination will be submitted to the AGM in 2018 to appoint Mrs. M. Helmes as a member of the Supervisory Board as of 19 April 2018 for a period of four years. It is the intention that Mrs. Helmes will join the Audit Committee and in time become the Chair of the Audit Committee, taking over this role from Mr. Huët who will remain a member of the Audit Committee.



John-Paul Schuirink
Federico Castillo Martinez

Director of Global Communication
Investor Relations Director

Michael Fuchs
Chris MacDonald / Aris Hernandez

Financial Communications Manager
Investor Relations Manager / Senior Analyst

HEINEKEN announces 'Drop the C' programme

Brewer sets new ambition to reduce carbon emissions

Amsterdam, 12 February 2018 - HEINEKEN today announced its 'Drop the C' programme for renewable energy. With 'Drop the C' the company aims to grow its share of renewable thermal energy and electricity in production from the current level of 14% to 70% by 2030. HEINEKEN wants to drive a real change towards renewable energy and will therefore not purchase unbundled certificates to meet its reduction targets. In addition, new emission goals will be set for distribution and cooling and, for the first time, also for packaging. The brewer commits to set science based targets for these areas in the next two years.

Since 2008 carbon emissions at HEINEKEN breweries have decreased by 41%[1] and in 2017 the company has already reached its 2020 emission targets in production.

Jean-François van Boxmeer, Chairman of the Executive Board/CEO of HEINEKEN commented:
"With all the good progress made in reducing our CO2 emissions, now is the right time to set ourselves new targets. When I visit our breweries I want to see that we are brewing with real green energy and that we are not achieving our reduction targets by buying unbundled certificates."

"Beyond production, distribution and cooling, we are also going to take a close look at our packaging, because it represents a significant portion of our carbon footprint. Packaging is an area where reductions will be harder to achieve because we simply cannot do this alone. We invite our business partners and others to work with us to reduce emissions across our business," concluded Jean-François van Boxmeer who recently joined the CEO Climate Leadership Initiative at the World Economic Forum in Davos.

Targets to reduce carbon emissions in production
HEINEKEN commits to increase its share of renewable energy in production from 14% today (renewable thermal energy and electricity combined) to 70% by 2030. This implies an 80% reduction target in carbon emissions[2] compared to the 2008 base year. During 2017 numerous projects have already been identified worldwide that will contribute to achieving the 2030 ambition. The targets will be externally verified by the Science Based Targets initiative.

The company realises that its diverse and extensive geographical footprint poses a challenge as it includes many countries in Africa, Asia and Latin America where renewable energy solutions are not readily available.

HEINEKEN's energy footprint in production is driven by thermal energy (scope 1 of GHG Protocol), which it uses to heat the boilers needed for brewing and by the electricity needed for the production process (Scope 2 of GHG Protocol). Today the split of this energy mix is 70% thermal and 30% electricity.

The company has already made inroads to renewable electricity by using solar and wind energy. Its brewery in Massafra, Italy is one of the largest solar breweries in the world with a capacity of 3.3 MW, while its Göss brewery in Austria is carbon neutral. In Singapore, HEINEKEN is brewing with solar energy and in the Netherlands the company is using wind energy and solar power. Currently 29% of HEINEKEN's global electricity usage is renewable.

Today 7% of the thermal energy used by HEINEKEN is powered by biomass and biogas. Making progress in renewable thermal energy is much harder to achieve than on the electricity side. Renewable thermal energy is often self-produced and needs to be reliable to keep the breweries running. In addition, today there are very few commercial solutions available here. However, the company has also experienced the positive impact that renewable thermal solutions can have on the communities in which it operates. Unproductive waste from communities can be turned into energy and provide income for the local people. In Vietnam, for instance, the company sources rice husks from local farmers to heat its brewing boilers. In Brazil a new biomass boiler was fired up in 2017 at the company's brewery in Ponta Grossa, solely using woodchips from certified reforestation companies.

HEINEKEN will continue to embark on reforestation projects which help to offset carbon emissions and also support water preservation. Currently the company has reforestation projects in Mexico, Spain and Indonesia.

Internally HEINEKEN will start piloting Carbon Shadow Pricing to help drive sustainable investment and innovation decisions.

Renewed ambition for distribution, cooling and packaging
HEINEKEN will set new emission reduction targets for distribution, cooling and packaging in the next two years. These three focus areas, part of the GHG protocol's scope 3, are difficult to tackle and neither HEINEKEN nor the industry can drive a reduction in carbon emissions on its own.

For distribution, the company will expand its reduction scope, currently only covering the Americas and Europe. For cooling, a focus area with HEINEKEN buying green fridges for many years already, the company will define new reduction targets. For packaging, reaching reduction targets will be most challenging given that it requires broad collaboration and changes in consumer behaviour. HEINEKEN is therefore committed to working with the industry, suppliers, governments, customers, consumers and other relevant parties. Collaboration, for instance, will be needed to increase the recycling rate of materials used in cans and bottles, reduce the amount of glass and other materials used in packaging and to support suppliers to move to renewable energy in their factories.

HEINEKEN's vision for renewable energy is called 'Drop the C', this name is inspired by the idea that taking the C out of CO2 leaves Oxygen. The play on words is also about ensuring sea levels do not continue to rise.

Heineken N.V. to nominate Mrs. Marion Helmes as Supervisory Board member

Amsterdam, 12 February 2018 - Heineken N.V. announced today that it will propose to the Annual General Meeting of Shareholders (AGM) on 19 April 2018 that Mrs. Helmes be appointed as member of the Supervisory Board of Heineken N.V. If appointed, Mrs. Helmes will join the Audit Committee and in time become the Chair of the Audit Committee, taking over this role from Mr. Huët who will remain a member of the Audit Committee.

Mrs. Helmes (52) is an independent director and served as the Chief Financial Officer and Speaker of the Management Board of Celesio until 2014. She joined Celesio in 2012 from Q-Cells where she was Executive Board Member and Chief Financial Officer from 2010-2011. Prior to this, Mrs. Helmes spent over ten years with ThyssenKrupp where she was Chief Financial Officer from 2005-2010 of ThyssenKrupp Stainless and then of ThyssenKrupp Elevators. Mrs. Helmes holds a Master in Business Administration from the University of Berlin FU and completed her PhD in Economics and Business Administration at the University of St. Gallen, Switzerland.

Mrs. Helmes currently serves as a Supervisory Board member on the boards of UNIPER, British American Tobacco, Bilfinger, Prosiebensat.1 Media and NXP. She is also the Chair of the Audit Committee of Bilfinger and member of the Audit Committee at UNIPER, British American Tobacco, Prosiebensat.1 Media and NXP. She is in addition Senior Advisor for Germany at UBS Europe and from 2009-2014 was a member of the Supervisory Board and Audit Committee of Fugro. It is noted that Mrs. Helmes shall step down from the Bilfinger Supervisory Board at its 2018 AGM.

Subject to approval of the AGM on 19 April 2018 in respect of the nomination of Mrs. Helmes and the re-appointment of Mr. Fernández Carbajal, Mr. Astaburuaga Sanjinés and Mr. Huët, the composition of the Supervisory Board of Heineken N.V. will be as follows as per the end of next year's AGM:

Hans Wijers (Chairman)
José Antonio Fernández Carbajal (Vice-Chairman)
Maarten Das (Delegated Member)
Michel de Carvalho
Christophe Navarre
Javier Astaburuaga Sanjinés
Jean-Marc Huët
Pamela Mars Wright
Yonca Brunini
Marion Helmes

tijd 09.01
De AEX opende op een plus van 523,90 +5,57 +1,07% Heineken EUR 81,70 -2,14 vol. 59.000

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