Heineken sees lift as cost cuts pay off

HEINEKEN, the world’s third-largest brewer, beat full-year earnings forecasts as cost cuts in Europe and savings from a large Mexican acquisition more than offset lower beer sales, lifting its shares.

The group, whose main brands are Heineken and Amstel, which are Europe’s number one and three beers, said it expected drinkers in Latin America, Asia and Africa to buy more of its lagers and other drinks this year.

The company said it would almost completely offset an expected low single-digit percentage rise in costs with higher prices.

Investors had been keen to hear the Dutch brewer’s outlook on rocketing raw material costs, likely to be a hot issue in 2011.

The futures price for malting barley has risen 50 per cent since the launch of the contract in May last year. Chief executive Jean-Francois van Boxmeer said: “Harvests influence a lot of the pricing. We are happy with that and we are of course now preparing the next year [2012] and there are still many uncertainties.”

The group said it expected European and US consumers to be cautious this year due to unemployment and austerity measures. But it said the premium beer segment, including its Heineken brand in many markets, would outperform the beer market overall.

Heineken did not disclose figures for the UK business but said the group’s western European arm reported a 3.6 per cent decline in volumes in 2010, while operating profits were up 14 per cent to €904m (£761.6m).

Its shares rose 3.1 per cent to close at €38.04 yesterday.