Report of the Executive Board
Operating profit
EUR 1,125 million
22%
Net profit
excl. extraordinary results
EUR 715 million
15%
Net profit
incl. extraordinary results
EUR 767 million
24%
Net turnover Total beer sales
EUR 9.2 billion 105.1 million hi
13% +7%
Heineken
beer sales
22.4 million hi
4%
Foreword by the Chairman
Alfred Heineken, who died on 3 January 2002, will always be remem
bered as a unique man and an inspiring leader. He was devoted
heart and soul to the company to the very end and was instrumental
in transforming the Heineken brand and the Heineken company into
a major international force.
Business was good for Heineken in 2001, with net profit on ordinary
operations up by 15.1% to EUR 715 million. As part of the ongoing
process of internationalisation and consolidation within the global
beer market, Heineken secured a substantial position in Germany in
2001 and acquired a brewery in Russia with a fast-growing market
position in early 2002. New breweries are under construction in
Nigeria and Vietnam. Despite the temporary weakening of the beer
market following the terrorist attacks in the United States on
11 September, the operating result increased from EUR 921 million to
EUR 1,125 million.
New acquisitions included in the consolidation played an important
part in the improvement in the operating result. The appreciation of
the US dollar against the euro also made a significant contribution
to the operating result, with the increased volume, improved sales
mix and higher selling prices also playing a part. The operating
result was, however, depressed by the higher costs associated with
the development and implementation of common systems through
out the Heineken group. Sales of Heineken beer increased from 21.6
to 22.4 million hi and sales in the premium segment were up by 7% at
16.7 million hi. In many markets we added new brands to our range
and were able increasingly to take advantage of economies of scale.
The joint venture formed in Germany with Bayerische Brau-
Holding places Heineken in a good position in Europe's largest beer
market. The highly fragmented German beer market has now
embarked on a protracted process of consolidation, in which strong
regional brands will have scope for further development. Through
this joint venture Heineken has also acquired stakes in two German
breweries, which own brands with strong development potential.
The inclusion in the joint venture of interest in the largest brewery
in Chile depends on the outcome of arbitration in that country.
Our interests in existing operations in Spain and Poland were
enlarged.
The acquisition of Bravo International in early 2002 has made
Heineken the fourth largest brewer in Russia in terms of production
volume and the country's fastest growing brewer. Bravo Inter
national is a solid base from which to pursue rapid growth in this
emerging beer market, where export growth potential has been
restricted by high import duties. With a range of well-positioned
local mainstream brands complemented by locally brewed pre
mium Heineken beer, the group is strongly placed to secure a broad
position in the Russian market.
Long-term profit growth is a priority
The process of consolidation, both nationally and internationally,
gathered momentum in 2001. With its geographical coverage,
strong brands and long experience of international expansion and
brand development, Heineken is well placed to play a significant
role in this trend. Heineken has massive growth potential, which can
be realised by increasing our shares of our existing markets, by
improving our sales mix and also through acquisition. It is essential,
however, that acquisitions make an adequate contribution to profit
growth. In the coming years Heineken will focus its search for oppor
tunities for further expansion mainly in Latin America, Asia/Pacific
and Russia, in view of their strong development potential, but
attractive opportunities for growth may also arise in Germany and
other parts of Europe and in Africa. To ensure stable profit growth,
Heineken takes care to strike a careful balance between its interests
in developed and emerging markets.
In most markets, Heineken aims to secure a significant market
share with strong local brands which complement one another and
offer clear economies of scale. The sales mix in these countries can
be optimised by introducing or developing the Heineken brand.
In a number of countries, such as the United States, Heineken will
concentrate only on securing a strong position in the premium seg
ment. In both cases, the Heineken brand is our most valuable asset
and is one of the driving forces behind profit growth. While national
brands will continue to dominate the mainstream segment, which
makes up the bulk of the beer market, the premium and speciality
beer segments increasingly offer growth potential for Heineken's
international brands. Ongoing development of the Heineken brand
is therefore our spearhead strategy.
HEINEKEN N.V. ANNUAL REPORT2001
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