15.
Heineken is targetting €200 million of annual cost
reductions by 2008 through efficiency improvements,
with the bulk of the cost savings materialising in
2007 and 2008.
The increased oil price will have an effect on
the costs of energy, transportation and packaging
material. Based on the current trading environment,
it is expected that only part of these higher input
cost can be passed on to the consumer.
The integration activities in Russia are well
underway. For 2006, the rationalisation of the
brand portfolio will have a dampening effect on
beer volume, whilst integration costs will also
put temporary pressure on the results in Russia.
Based on the above Heineken does not expect
organic growth in net profit in 2006 to exceed
mid-single digits.
Heineken's long-term profit forecast is positive
as a result of the strength of its brand portfolio,
its consistent and intensified spend on innovation
and on Heineken, its strong distribution structure,
and the focus on efficiency improvements.
Capital investments
Investments in property, plant and equipment
in 2006 are expected to total around €875 million,
of which about €269 million relates to replacement
of brewing equipment. In 2006, the construction
of the new brewery in Seville, Spain accounts for
a capital expenditure of €110 million. In principle
the investments will be financed from cash flow,
supplemented where necessary with available
credit facilities.
Heineken will relentlessly pursue further cost savings
and efficiency gains, in particular in Europe but also
in other regions of the world. Therefore Heineken
expects that, on a like-for-like basis, the reduction
in the number of employees will continue.
Heineken N.V. - Annual Report 2005
