The world beer market will continue to grow in
2007. The volume of the international premium
segment is expected to grow at an average rate
twice that of the overall beer market. Thanks to
its strong position in this segment, the Heineken®
brand in particular will benefit from this trend,
driving the growth of revenue and profit.
Heineken Premium Light in the USA will sell more
than 1 million hectolitres and will be EBIT neutral
in 2007 even though incremental marketing
investments will rise from USD55 million in 2006
to USD70 million in 2007. After the completion
of the integration and brand portfolio
optimisation in 2006, revenues and EBIT in
Russia will continue to grow organically. Heineken
expects input costs to increase by 7-8 per cent
as a result of higher purchasing prices for barley
and packaging materials. In 2007 the further
implementation of Fit2Fight, targeting €450
million of annual fixed cost reductions before
tax and after inflation by 2008, will result in gross
savings of €135-€155 million before tax and
€140-170 million restructuring costs before tax.
Based on the above, Heineken expects to achieve
organic growth in net profit in the range of 10-13
per cent in 2007.
Currency exchange rates are not expected
to have a major impact on Heineken's profit
development as the transaction risk of the dollar
has been hedged to a large extent at rates which
are only slightly lower than those realised in 2006.
Capital investments and headcount
Heineken expects the capital expenditure
related to property, plant and equipment to total
around €900 million in 2007. A large part of this
investment is related to replacement of existing
equipment. In Spain, Tunisia, Laos, India and
Mongolia we are in the process of constructing
new breweries whilst major capacity expansions
are underway in Poland, Thailand, Chile and
Africa. In principle, the capital investments
will be financed from the cash flow.
The cost-saving programme Fit2Fight and
outsourcing of activities will lead to a further
increase of efficiency and will enable the
Company to better compete on the world
beer market. As a result of the cost-reduction
programmes, the downward trend in the
number of employees will continue.