Outlook 2015
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Overview
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Supervisory Board
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In 2015 HEINEKEN expects a continued challenging external
environment, however, delivering on its strategic priorities is
expected to drive further organic revenue and profit growth.
Continued revenue growth
HEINEKEN expects positive organic revenue growth in 2015 with
volume growth at a more moderate level than 2014, and weighted
towards H2 (tougher comparatives in H1). Continued volume growth
in developing markets will offset more subdued volume growth
elsewhere. Revenue per hectolitre is expected to increase driven by
revenue management. Pricing will be limited by deflationary and
off premise pressure in some markets.
Increased commercial investment
HEINEKEN will continue its targeted higher commercial investments
across the regions, and expects a slight increase in marketing and
selling (beia) spend as a percentage of revenue in 2015 (2014:12.7%).
Continued cost savings
HEINEKEN is committed to delivering further cost savings and will
continue its focus on driving cost efficiencies across the company.
These are an important driver of the medium term margin guidance.
Asa result of ongoing productivity initiatives, HEINEKEN expects an
organic decline in the total number of employees in 2015.
Input cost prices are expected to be slightly lower in 2015 (excluding
a foreign currency transactional effect).
Further margin expansion
HEINEKEN continues to target a year on year improvement
in consolidated operating profit (beia) margin of around 40bps
in the medium term. This will continue to be supported by tight cost
management, effective revenue management and the anticipated
faster growth of higher margin developing markets. In 2015
consolidated operating profit (beia) margin will be adversely
impacted by approximately 25bps from the disposal of EMPAQUE,
the Mexican packaging business, announced on 1 September 2014
and expected to complete in Q1. HEINEKEN expects to partially but
not fully offset this, such that in 2015 consolidated operating profit
(beia) margin expansion will be somewhat below the 40bps medium
term level.
Foreign currency movements
Assuming spot rates as of 5 February 2015, the calculated positive
currency translational impact on consolidated operating profit (beia)
would be approximately €130 million, and around €80 million at net
profit (beia). However the foreign exchange markets are very volatile.
Improved financial flexibility
HEINEKEN remains focused on cash flow generation and disciplined
working capital management, with a commitment to a long-term
target net debt/ EBITDA (beia) ratio of below 2.5x. In 2015, capital
expenditure related to property, plant and eguipment is expected to
be approximately €1.6 billion (2014: €1.5 billion). A cash conversion
ratio of below 100% is expected in 2015 (2014: 79%).
Interest rate
HEINEKEN forecasts a stable average interest rate of c.3.7% in 2015
(2014:3.7%).
Effective tax rate
HEINEKEN expects the effective tax rate (beia) for 2015 to be broadly
in line with the prior year (2014: 29.7%).
5
Heineken N.V. Annual Report 2014
