Report of the Executive Board
8
1988 in brief
1988 was a satisfactory year for the
enterprise in most respects. Sales
increased, though market conditions
differed from country to country. In the
Netherlands the turnover and earnings
from beer activities were under pressure.
The volume of our exports remained at
the previous year's level, but here too
we encountered increasing competition.
These factors were offset by the good
earnings of a number of other operating
companies, especially in Europe. The
policy of internationalization pursued in
previous years, as a result of which a
broad geographical spread of activities
has been achieved, is clearly showing
results.
Heineken was well able to maintain its
prominent position on the international
beer market. The enterprise kept its
leading position in Europe. On the basis
of volume the third place world-wide was
maintained.
Geographical breakdown of sales of beer brewed under the supervision of Heineken:
(in thousands of hectolitres) 1988 1987 increase
Europe
26,493
25.168
5.3
Western Hemisphere
10,356
8.546
21.2
Africa
7.680
6.880
11.6
Asia/Australia/Oceania
2.487
2.446
1.7
47,016
43.040
9.2
Net turnover rose to N.fl. 7,291 million,
while the net profit, being N.fl. 291 million,
slightly exceeded the 1987 level.
In contrast to previous years,
developments in the international
currency markets were relatively calm.
During the year under review, therefore,
the effect of currency fluctuations upon
translation of local figures to guilders
was very small. We are pleased with the
relative stability of the rates of exchange,
as large variations have a disturbing
effect on the conduct of business. We
accordingly welcome the fact that the
authorities concerned are increasingly
recognizing the importance of stable
rates of exchange and, through
international consultation, are prepared
to make a contribution to such stability.
Our shipments to the United States,
which were under pressure in 1987 as
a result of the falling dollar rate and a
decrease of stocks at the distribution
level, are now once again showing an
upward trend. Although competition
remains strong, Heineken has managed
to maintain its leading position in the
import segment.
The costs entailed by the restructuring f
measures, especially in several European
operating companies, again affected
earnings in 1988. The positive results of
the current restructuring programmes
are increasingly becoming evident.
As already announced in the previous
annual report, we increased our interest
in the French holding company Sogebra
S.A. from 51% to 100% in 1988. This
involved an amount of N.fl. 200 million.
Within the framework of a share
exchange, the interest held by our Italian
operating company Birra Dreher S.p.A.
in Societa Internationale Birraria S.p.A.
(S.I.B.) and Nuova Birra Messina S.p.A.
(N.B.M.) was increased to 100%. Our
interest in Dreher now amounts to 85.2%,
compared with 93% at the end of 1987.
S.I.B. and N.B.M. were included in the
consolidation for the first time in 1988.
The effect of changes in the consolidation
on earnings was modest.
After extensive studies a start was made
in 1988 on activities in the People's
Republic of China by means of an
interest in the Mila brewery in Shanghai.
We are co-operating in this project with
Fraser Neave Ltd., our partner in
Singapore, and the Chia Tai Group of
Hong Kong.
Towards the end of 1988 the
announcement was made on a proposed
merger between Gedistilleerd en
Wijngroep Nederland B.V. and Bols
Nederland B.V., a subsidiary of N.V.
Koninklijke Distilleerderijen Erven Lucas
