Chief Executive's Statement continued
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Shaping the cider category
2015 was a landmark year for our cider business.
We have made great progress in unlocking some
of the technical, cost and regulatory barriers to
growth and take-up by our global businesses.
As a result, we have expanded availability to
71 markets and for the first time sold more
than 1 million hi outside the UK. Consumers
in Nigeria. Bulgaria and Singapore are now
discovering the appeal of cider. And to
complement this, the UK cider market is back
in growth thanks to new flavour innovations
and increased investment in the category.
Innovations driving top-line growth
Innovation is the engine of growth for our
business. In 2015 9.2 per cent of our revenue
was driven by innovations. Our consumer-
focus and insights enabled us to capitalise on
the growing appetite for low and no alcohol
products. Radler 2.0% and Radler 0.0% are now
available in 45 countries on five continents
and are helping to create new and different
drinking opportunities. The focus on finding
innovative new ways of delivering these and
our other beers is also driving good results. The
SUB. for the home market, and Brewlockin bars
are ensuring a premium draught experience
for consumers. Innovation is at the core of our
business and is supported by our behaviours.
Our focus is on investing in the types of
innovation that will fuel continued growth
in the future.
Accelerating delivery of global strategy
Over many years we have learned and proved
that success is achieved by having a well-
articulated. aligned strategy that leverages your
strengths as a business and that is delivered
with energy, innovation and commitment. At
HEIN EKEN we have all of this plus a relentless
focus on improvement. Earlier in the year, we
changed our operating model and ways of
working in order to better deliver our strategy,
to focus more on growth and to be more
agile in responding to consumer needs in the
marketplace. The business has been regrouped
around four geographic regions, we have
appointed a dedicated Chief Commercial
Officer and we have streamlined the Head Office
organisation. As a result our management
structure is flatter, our operating companies
are more empowered and our cost of doing
business is lower.
Consolidation in the industry
The competitive landscape will shift significantly
in 2016. We again demonstrated in 2015 that
when we believe there is a clear opportunity to
create value through acguisition or investment in
new markets, we will act. In July, we inaugurated
our $60 million greenfield brewery in Myanmar;
in September we announced a new joint venture
and brewery in Ivory Coast.
We also realigned our partnership arrangements
with Diageo in a number of key markets: we
now have ownership of Desnoes Geddes in
Jamaica along with the iconic Red Stripe brand;
we acguired Diageo's shareholding in GAPL,
giving us Guinness Anchor Berhad (GAB) in
Malaysia and the licence for Guinness and ABC
Stout in Singapore. As part of the transactions
we also sold our minority interest in Ghana to
Diageo. During the year we also restructured
our operations in South Africa and Namibia.
In Europe too we were active with the
acguisition of Pivovarna Lasko in Slovenia.
I feel very confident that with our strategy,
well-balanced global footprint and fantastic
people and brands we are ready to meet or
take advantage of whatever competitive
challenges or opportunities that may come
our way. 2015 was a strong year for the
Company and we are well positioned to build
on this momentum.
2016 outlook
In 2016 HEIN EKEN expects to deliver further
organic revenue and profit growth despite an
increasingly challenging external environment,
with margin expansion in line with the medium
term margin guidance of a year on year
improvement in operating profit (beia) margin
of around 40bps. Assuming spot rates as
of 4 February 2016 the calculated negative
currency translational impact would be
approximately €60 million at consolidated
operating profit (beia). and €35 million at net
profit (beia). Foreign exchange markets remain
very volatile. We expect an average interest
rate of c.3.3%, and an effective tax rate (beia)
broadly in line with 2015. Capital expenditure
related to property, plant and eguipment should
be slightly above €2 billion (2015: €1.6 billion).
Thank you
As I do every year. I want to thank all
my colleagues around the world for their
professionalism and commitment. It is a
privilege to work with such a dynamic and
diverse group and to lead this exceptional
Company. The changes we made during the
year at our Head Office were difficult. We said
goodbye to colleagues who had made a strong
contribution to the Company. I want to thank
them again for their hard work and commitment
and to wish them well. I would also like to thank
every single one of our consumers who - every
day - make the choice to enjoy our brands and
I would like to recognise our customers, partners
and stakeholders for their continuing support
and input into what we do and how we do it.
The world and the challenges it presents will
continue to test us into 2016 and beyond. But
thanks to all our people, brands, global footprint
and strategy. I believe we are well positioned to
maintain the momentum we have created.
lean-Frangois van Boxmeer
Chairman of the Executive Board/CEO
Amsterdam. 9 February 2016
5 Helneken N.V. Annual Report 2015
