Shaping the business
24 Heineken N.V. Annual Report 2004 Report of the Executive Board Chairman's Message
Rigorous cash flow management has delivered more than €500 million of additional cash over
the last 18 months. Next to strict working capital management, we will continue to boost our cash
flow through specific focus on reducing capital invested in areas including commercial fixed assets,
on-premise loans and technical investments.
Cost reduction was again high on our agenda in 2004. During the year we took the tough, but
necessary decisions to close 6 breweries. Alongside this, we increased the focus on the reduction of
other areas of our cost base. This is a continuing driver of our ability to remain globally competitive.
ENSURING THAT ACQUISITIONS, PARTNERSHIPS
AND DISTRIBUTION STRATEGIES CREATE VALUE
Acquisitions will be as much a feature of our future as they have been of our past.
In 2004, we were again active. As a strategic move we strengthened our positions in fast growing
markets such as China and Russia in particular and we also increased our share in several existing
operations. Moving forward, where the right opportunities to create value exist, we will continue
to build our business in the world's high growth beer markets.
Partnerships too have long been a feature of the way that we do business and 2004 was no
exception. In the USA we concluded an agreement with FEMSA in Mexico, to distribute their strongly
growing brands. In South Africa, we launched Brandhouse, a joint venture business with Diageo
and Namibia Breweries; in Australia, we entered into a joint venture with Lion Nathan. Each of these
partnerships will help to build and strengthen our position in these important markets.
Integration of Brau Union into the business is on track in terms of both timing and the delivery
of the savings and synergies we said we would generate. This has been a significant achievement that
lays the foundation for future success. We believe the Central and Eastern European beer markets
will be a strong source of growth and the measures we are putting in place now across that part of the
Heineken organisation will secure both our leadership position in many markets and our longer-term
profit growth.
Net profit in millions of euros
Group volume in millions of hectolitres
1995
1996
1997
1998
1999,
2000
2001
2002
2003
2004
301
2000
297
2001
345
2002
445
2003
516
2004
621
767
795
798
537
74.8
81.0
84.8
99.0
112.6
