Financial Review
71 Heineken N.V. Annual Report 2004 Report of the Executive Board
Net turnover in billions of euros
OB Beer 7.7
B Soft drinks 1.2
Wines and spirits 0.8
B Other income 0.3
Net turnover and cost of sales
Net turnover rose by €750 million to €10,005 million in 2004, an increase of 8.1%. First-time consolida
tions added 9.1% to turnover and organic growth amounted to 2.5%, reflecting improvements in the
sales mix, higher selling prices and higher volume. This was offset by a 3.5% reduction in turnover due
to lower exchange rates against the euro in particular for the US dollar, the Polish zloty, the Nigerian
naira, the Russian rouble, the Egyptian pound and the Singapore dollar.
A number of companies were included in the consolidation for the first time in 2004. Shikhan
Brewery and Volga Brewery in Russia were consolidated as from 1 August and Sobol Brewery in Russia
was consolidated as from 1 December. The BBAG group in Austria, which has businesses in Austria,
Romania, Poland, Hungary and the Czech Republic, was consolidated as from 1 October 2003. Several
beverage wholesalers were also acquired in Italy, Spain and Poland.
There was a change in the accounting principles in 2004 which affects the profit and loss account.
With effect from the beginning of the 2004 financial year, pension costs and provisions have been
accounted for on the basis of Guideline 271 Employee Remuneration of the Guidelines for Annual
Reporting in the Netherlands (GAR Guidelines). This change in accounting policies had the non-recur
ring effect of reducing shareholders' equity by €187 million. If Guideline 271 had been adopted in 2003,
the pension costs in 2003 would have been €23 million higher and the net profit €15 million lower.
Operating expenses rose 9% to €8,757 million, with first-time consolidations adding 10%. Expenses
were held down by lower exchange rates for several currencies. Raw material costs declined, while
the costs of packaging, energy and water rose slightly. Marketing and selling expenses were up 2%, but
decreased slightly as a percentage of net turnover from 12.2% to 12.0%. Personnel costs were higher,
Operating profit and net profit Operating profit Net profit
in millions of euros
2003
1,222
798
Organic growth
67
65
First-time consolidations
93
19
Amortisation of goodwill
-50
-50
Exchange effects
-158
-99
Reorganisation costs in the Netherlands (2003)
74
48
Book gain Quilmes (2003)
0
-71
Book gain Whitbread (2004)
0
17
Impairment Kaiser (2004)
0
-190
2004
1,248
537
