Twelve months ago, we assured our stakeholders that
Heineken would emerge a stronger business from
the global financial crisis. Whilst the downturn is not
yet over, in 2009 we delivered an outstanding financial
performance, transformed our platform for future
growth and built a stronger, more competitive
We were able to do so by harnessing our core
strengths: the commitment and excellence of our
people, the strength of our brands and our ambition
to build profitable future growth.
An outstanding financial performance
Transforming our platforms for future growth
Transforming our future in the Americas
Transforming our future in India
Strengthening our partnership in Asia
At the start of 2009 we aligned our business behind three
clear priorities: maximising free operating cash flow,
improving the profitability of our newly acquired businesses
and reinforcing our market positions.
During 2009, every single manager in Heineken had, and in
2010 will continue to have, a cash flow target as their priority.
This rigorous, Company-wide focus drove a 216.5 per cent
increase in our free operating cash flow to EUR 1,741 million,
in addition, we met our commitment to achieve a cash
conversion rate greater than 100 per cent, achieving
147.7 per cent.
In critical markets such as the UK and Russia, we developed
specific turnaround plans to increase profitability. In both,
robust pricing, cost reduction, stock keeping unit and
portfolio rationalisation played a significant role in the
success. These improved performances combined with
continued growth from all regions contributed to a 387.1 per
cent growth in net profit and a growth in organic net profit
of 18.2 per cent.
Cost reduction across all aspects of the business has also
been a major driver of our profitability. The Total Cost
Management programme (TCM) identifies projects that allow
us to significantly reduce our cost base. It follows the success
of our 2005-2008 Fit2Fight programme and in its first year
TCM bore fruit, with EUR 155 million of costs taken out of
But it is not only the increases in our bottom line that are
notable. Our value strategy continues to be successful,
despite huge recessionary pressures. This clearly
demonstrates the benefit of long-term brand investment
in order to build equity, relevance and resilience.
In 2009, the Heineken brand again outperformed our
portfolio. To us this confirms that the trend towards
premium beer continues and that it drives sales and
It was the confidence in our people and the success of our
strategy that convinced us in the second half of the year
to take some bold steps that will transform the future of
In January 2010, we announced the acquisition of FEMSA
Cerveza (FEMSA) in Mexico and Brazil. Completion of the
transaction is expected in the second quarter of 2010 and is
subject to the approval of the relevant regulatory authorities
and the approval of the shareholders meetings of Heineken
N.V., Heineken Holding N.V. and FEMSA. This is one of the
most exciting and significant transactions in Heineken's
history. It gives us a major new platform to grow value in
three of the world's four biggest beer profit pools that
together account for 35 per cent of the total global profit
for the beer industry.
The acquisition will bring new people, exceptional brands
and different ideas into our business and will give FEMSA
a 20 per cent economic holding in the total Heineken
Group. FEMSA will also nominate two representatives for
appointment to our Supervisory Board. We welcome FEMSA
as a significant shareholder and we look forward to their
valuable contribution to Heineken's future.
In December, we announced a strong partnership in India,
one of the world's fastest growing and most exciting beer
markets. Our new shareholders' agreement with Dr. Vijay
Mallya gives us a strong role in the governance of the market
leader, United Breweries Limited (UBL), in which both
Dr. Mallya and Heineken own 37.5 per cent. This will enable
us to unlock the market's considerable potential and to shape
the premium segment. We are now uniquely positioned to
benefit from the highly favourable demographics and strong
economic fundamentals in the Indian market.
At the same time as our Indian transaction, we announced
that we had strengthened and enlarged Asia Pacific Breweries
(APB), our long-standing and successful joint venture
partnership with Fraser Neave. At the beginning of 2010,
we transferred a significant part of our controlling interest
in PT Multi Bintang Indonesia and our controlling interest in
Grande Brasserie de Nouvelle-Calédonie S.A. to APB in order
to create a more profitable business and a stronger platform
for growth in South East Asia and the Pacific Islands.
Annual Report 2009 - Heineken N.V.