Beer sales lift Heineken's profit prediction

By staff reporter

- Last updated on GMT

Related tags Heineken Russia

Heineken has said profits this year were likely to be better than
it thought, thanks to surprisingly good beer sales in both Eastern
Europe and the more stagnant US market.

Heineken predicted organic net profits would grow slightly more than 10 per cent during 2006. The Holland-based brewer originally thought it would be tough to get above mid-single digits.

The group's new optimism stemmed largely from better-than-expected volume rises in the first half of the year.

Volumes in Central and Eastern Europe were up 18 per cent on the first six months of 2005, led by beer brands like Amstel, Ochota and trademark Heineken in Russia.

The Americas followed closely behind with an increase of 13.4 per cent. Heineken said it was particularly pleased with the launch of its Premium Light beer on the troublesome US beer market.

Premium Light, it said, should exceed its 40m-litre sales target for the year. The success follows that of other light beers in the US, notably SABMiller's Miller Lite, which have gone some way to halt falling sales for beer in America generally.

Heineken said profits would also be aided both this year and in the longer term by its cost savings scheme, Fit-to-Fight. The project is expected to cut fixed costs by €200m by 2008, with a large part of this set to be achieved in 2007.

In Russia, which remains Heineken's largest beer market by volume, the brewer said it had axed 500 jobs as part of a plan to integrate newly acquired breweries and make its business more efficient. It now has 10 breweries in Russia.

The group said it expected its recent Russian acquisitions, including Patra and Baikal, to become value-enhancing in five years. It said it also wanted to achieve a 20 per cent share of the Russian beer market in that time.

Related topics Manufacturers Beer & cider Heineken

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