11
Costs and profit as a percentage
of the net turnover
50.8 Raw materials, other
materials and services
16.3 Excise duties
19.8 Personnel costs
5.7 Depreciation and value
adjustments
2.2 Taxes on profit
1.2 Interest and miscellaneous
4.0 Net profit
Financial developments
Net turnover
Net turnover rose from N.fl. 6,659 million
in 1987 to N.fl. 7,291 million, correspond
ing to an increase of N.fl. 632 million
(9.5%). Approximately N.fl. 175 million
of the higher net turnover was attributable
to changes in the extent of consolidated
participations, in which context the con
solidation for the first time of Societa
Internationale Birraria S.p.A. and Nuova
Birra Messina S.p.A., both in Italy, is
worth mentioning. Higher selling prices
combined with a higher volume of sales
considerably contributed to the rise in
net turnover. While sales on the Dutch
beer market dropped, those in other parts
of Europe rose. The total export volume
was up to the previous year's level. Net
turnover was marginal influenced by
changes in exchange rates upon trans
lation into guilders of the proceeds of
our foreign Group companies.
The net turnover relates to:
(in millions of guilders)
1988
1987 increase
Sales proceeds
Beer
6,008
5,374
11.8
Soft drinks
707
697
1.4
Spirits and wine
393
395
- 0.6
Merchandise and other trading income
74
119
-37.5
7,182
6,585
9.1
Proceeds from services
109
74
47.2
7,291
6,659
9.5
Net turnover
(in billions of guilders)
6.7
6.7
7.3
1984 1985 1986 1987 1988
Total operating expenditure
As was the case with net turnover, oper
ating expenditure showed a rise (9.9%).
Consequently, the sum of the operating
expenditure totalled N.fl. 6,753, compared
with N.fl. 6,148 in the previous financial
year. Owing to changes in the extent of
the consolidation, costs rose with practi
cally the same extent as net turnover.
The costs of raw materials, goods and
services purchased were higher than
those of the previous year, with a con
siderable rise being noticeable in selling
costs. As a result of increased rates for
excise duties in Italy, Spain and a number
of African countries, the sum of excise
paid showed an increase. On account
of these higher costs and also because
of the increase in depreciations and per
sonnel costs the effect of higher selling
prices was exceeded. The consequences
of changes in exchange rates as at the
end of the financial year on operating
expenditure were minor and practically
equal to the effects on the net turnover.
Trading profit
Trading profit rose by 5.1% from N.fl. 511
million in 1987 to N.fl. 537 million. The
influence of consolidation changes was
slight. Trading profit was favourably in
fluenced by increased sales, but this rise
was partly offset by the lower net margin.
Trading profit as a percentage of net
turnover amounted to 7.4%, compared
with 7.7% in 1987. Expressed as a per
centage of total capital employed, the
trading profit was 8.2%, compared with
8.4% in the previous financial year.
Net profit
Net profit rose from N.fl. 287 million in
1987 to N.fl. 291 million in 1988, repre
senting an increase of N.fl. 4 million, or
1.4%. Interest paid rose by N.fl. 17 mil
lion, from N.fl. 110 million to N.fl. 127
million. This was mainly caused by new
borrowings for the purpose of new invest
ments. Interest income decreased from
N.fl. 63 million to N.fl. 35 million. This is
attributable to the smaller extent of cash
and securities, while also in 1987 inci
dental proceeds of N.fl. 23 million re
sulted from the sale of short-term secu
rities. Overall, the financing costs rose
by N.fl. 44 million, from N.fl. 48 million
in 1987 to N.fl. 92 million in 1988.
The interest cover - the ratio between
Group profit before interest and taxes,
on the one hand, and interest on the
other - was 6.1compared with 7.3 in
1987. When calculating the interest cover
for 1987, the influence of the above pro
ceeds on the sale of short-term securities
was left out of consideration. Taxes on
profit dropped from N.fl. 177 million to
N.fl. 160 million. For the Heineken Group