Financial Review
Net turnover and cost of sales
Net turnover rose by €773 million in 2003
to €9,255 million, an increase of 9%, of
which first-time consolidations accounted
for 8%. Organic growth in net turnover,
reflecting improvements in the sales mix,
higher selling prices and higher volume,
amounted to 5%. This was offset by a 4%
reduction in turnover due to lower
exchange rates against the euro for the US
dollar, the Nigerian naira, the Polish zloty
and the Singapore dollar in particular.
A number of companies were included
in the consolidation for the first time in
2003. Karlsberg in Germany and Dinal in
Kazakhstan were consolidated as from
1 January. CCU in Chile and Karlovacka in
Croatia were consolidated (CCU
proportionally and Karlovacka fully) as
from 1 April. The BBAG group in Austria,
which has businesses in Austria, Romania,
Poland, Hungary and the Czech Republic,
was consolidated as from 1 October.
A number of beverage wholesalers were
acquired in Italy, Poland and Switzerland.
There were two changes in the report
ing rules in 2003 which affect the profit
and loss account. Net turnover is reported
excluding excise duties and all discounts
directly attributable to turnover. The
comparative figures for 2002 have been
restated accordingly.
This change has no effect on the reported
Net turnover
in billions of euros
Beer
7.3
Other income
0.3
Soft drinks
1.0
Wines and spirits
0.6
result. As from 2003, goodwill is capi
talised and amortised. Goodwill of €1,124
million was capitalised and amortisation of
€31 million was charged against the result.
Operating expenses rose 12% to €8,033
million, over half of this increase being
accounted for by first-time consolidations.
The cost-reducing effect of lower
exchange rates was offset by a modest rise
in raw material and packaging costs and a
7% increase in marketing and selling
expenses, the latter amounting to 12.2% of
net turnover in 2003, compared with 12.4%
in 2002.
Staff costs were higher, reflecting the first-
time consolidations and growth in the
number of employees. The reduction in
staff costs in Europe due to the lower
staffing levels in the Netherlands was
offset to some extent by rises in other
regions, especially in Africa in connection
with the new brewery in Nigeria. Non
recurring reorganisation costs of €74
million were incurred in the Netherlands.
Operating expenses also increased by
€31 million by the first-time amortisation
of goodwill.
Operating profit and net profit
The operating profit was 5% lower in 2003
at €1,222 million, compared with €1,282
million in 2002, mainly due to the amor
tisation of goodwill and the non-recurring
reorganisation expenses in the Nether
lands. The operating profit as a proportion
of net turnover decreased from 15.1% to
13.2%.
New acquisitions made a positive
contribution to operating profit of €45
million, before amortisation of goodwill
of €31 million.
The negative effect of exchange rate
movements on operating profit amounted
to €88 million.
Income from non-consolidated participat
ing interests increased by €53 million to
€101 million, mainly due to extraordinary
net income of €71 million from the sale of
the 15% interest in Argentinean brewing
group Quilmes.
Net interest charges rose €31 million to
€140 million, largely reflecting additional
interest expense in connection with loans
raised to finance acquisitions, the debts
Operating profit and net profit
in millions of euros
2002
Organic growth
First-time consolidations
Amortisation of goodwill
Exchange effects
Reorganisation costs in the Netherlands
Book profit on Quilmes
2003
Operating profit Net profit
1,282
795
88
55
45
0
-31
-31
-88
-44
-74
-48
-
71
1,222
798
report of the executive board
47
