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Heineken FY18 Profit Down, Volume Up; Sees Profit Growth In FY19; Stock Up

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Dutch brewer Heineken NV (HKHHF.PK) reported Wednesday weak net profit in its fiscal year 2018 on charges, while revenues were higher with improved beer volume. The company recorded growth in all regions. Looking ahead, for fiscal 2019, the company anticipates adjusted operating profit to grow by mid-single digit on an organic basis amid the uncertain and volatile environment. In Amsterdam, Heineken shares were gaining around 5 percent in the morning trading.

For 2019, the company expects superior top-line growth driven by volume, price and premiumisation, and continued cost management and productivity initiatives.

Commenting on the 2018 results, CEO Jean-François van Boxmeer said, " The Heineken brand grew 7.7%, its best performance in over a decade... Our premium portfolio grew double digit, led by our international brands, craft & variety and cider portfolios. All regions grew and Brazil recorded a strong performance following the successful integration of our two businesses."

For fiscal 2018, net profit on IFRS basis declined 1.6 percent to 1.903 billion euros from 1.935 billion euros a year ago. Earnings per share were 3.34 euros, down 1.5 percent. The company noted that its net profit included 183 million euros of impairments, mainly in the DRC.

Net profit before exceptional items and amortisation or beia was 2.42 billion euros, compared to 2.25 billion euros last year. Earnings per share (beia) was 4.25 euros, up 7.9 percent.

Adjusted operating profit increased 6.4 percent organically, driven by higher revenue growth and overall slower growth of expenses despite continued pressure from higher input and logistics costs, the company said.

Operating profit margin (beia) decreased by 17 bps due to the first time consolidation of Brazil, rising input costs and adverse currency developments.

IFRS revenue grew 3.7 percent to 26.81 billion euros, and net revenue grew 4 percent to 22.47 billion euros. Net revenue (beia) increased 6.1 percent organically with a 4 percent increase in total consolidated volume and a 2 percent increase in revenue (beia) per hectolitre.

Consolidated beer volume grew 4.2 percent organically in 2018 to 233.8 million hectolitre. Beer volume in the fourth quarter was up 3.3 percent to 58.6 million hectolitre, against a challenging comparable base.

The company noted that Heineken brand volume in the year grew 7.7 percent organically 38.7 million hectolitre, its best performance in over a decade. In the fourth quarter, the growth was 6.7 percent.

Further, the company company said, for 2018, payment of a total cash dividend of 1.60 euros per share will be proposed to the Annual General Meeting of Shareholders on April 25. This represents an increase of 8.8 percent versus 2017, translating into a 37.6 percent payout.

In Amsterdam, Heineken shares were trading at 85.40 euros, up 4.97 percent.

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