Prospects
Heineken is continually engaged in strengthening its
position world-wide. Amongst other things, this is done by
the enlargement of market shares and the penetration of
what are new markets for the enterprise. The strength of this
process is partly determined by the possibilities which
arise for the purchase of or acquisition of interests in
existing breweries. In addition, opportunities are utilized for
having our international beer brands produced under
licence by third parties.
In recent years large-scale investments have been made
along these lines in the expansion of the enterprise. In
particular, our activities in Europe have grown into an
integrated brewery enterprise which occupies a prominent
position in nearly all the big European markets and which
furthermore is indisputably the world's largest beer ex
porter.
The profitability of the enterprise can only be optimum if all
the individual operating companies have at their disposal
the most up-to-date installations and the most efficient
working methods. For this purpose, particularly in France
and Spain, considerable investments will still have to be
made in the next few years in conjunction with the
previously mentioned measures in the sphere of produc
tion. In the first instance the associated costs will affect the
trend of earnings there. In the medium term, however, we
view the course of affairs in Sogebra and El Aguila with
confidence and these companies will also be able to
develop satisfactorily as regards profitability.
From the foregoing it is evident that the level of investments
for the purpose of expansion and replacement will again
remain high in 1986. We expect to invest some N.fl. 700
million in tangible fixed assets such as plant and installa
tions as well as packaging material. The investments will be
financed from the cash flow and the liquid resources
available, which increased further early in 1986 through the
issue of 6.5% Euro-guilder Notes in the amount of N.fl. 150
million.
The numbers of personnel in the newly commenced
financial year will to a certain extent be affected by the
rationalization measures in a number of countries. We do
not in fact expect any great changes in the total number of
personnel.
The sales possibilities of our enterprise can be favourably
influenced by further economic growth, particularly in
Europe, and the associated increase in private spending.
The sharp decline in inflation, together with the ac
companying downward pressure on the level of interest,
are positive factors for the trend of earnings. The rate of the
growth of profit in the next few years will be temporarily
retarded, however, by the charges resulting from restruc
turing and rationalization in several European countries.
Amsterdam. March 20, 1986
Fleineken
Van Schalk
Van der Werf
Van de Vijver
Coebergh
33