Heineken profit rises 9.9 percent in third quarter

AP News
Posted: Oct 24, 2012 5:48 AM

AMSTERDAM (AP) — The Dutch brewer Heineken NV said Wednesday third quarter net profit rose 9.9 percent to €577 million ($749 million), with growth in all regions except Europe.

The company said profits increased thanks to higher sales and savings from jobs it has cut, offset somewhat by higher raw materials costs and investments in new capacity.

Net profit in the same period a year ago was €525 million. Sales rose 7.1 percent to €4.97 billion, Heineken said.

"Spain, Italy, France are holding up pretty well," said Chief Executive Rene Hooft Graafland of the company's European operations, speaking on a conference call. Heineken is the biggest brewer in Britain with Scottish & Newcastle brands, in the Netherlands with Heineken, and in Europe overall. "We see some pressure on the margins, but overall these markets are pretty resilient."

Stripping out the effects of currency changes and acquisitions, sales were up 4 percent, 2.5 percent due to higher selling prices and 1.5 percent due to volume increases.

Heineken said it won market share in the United States, with strong growth of its Dos Equis brand. Global sales of its tequila-flavored beer Desperados increased by more than 10 percent. Sales in the large Taiwanese market fell sharply, which Heineken said was due to competitors introducing new brands.

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Fruit-flavored beers have been a big hit in Taiwan this year, including one introduced by Japanese competitor Kirin.

Analyst Richard Withagen of SNS Securities, who rates shares a Hold, said the results were in line with expectations.

"Weakness in Western Europe and Asia was compensated by a better than expected performance in the Americas," he said in a note on the earnings.

Shares opened 2.8 percent lower at €46.32.

Heineken said its €3.5 billion buyout of the parts of Tiger beer maker Asia Pacific Breweries it doesn't already own is on track for completion in November, pending approval from regulators in Singapore.