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Heineken H1 profits up by 13% – share price soars to 11 month high

heineken

* H1 op profit up 13 pct to 993 mln eur vs f’cast 927 mln

* Forecasts high single-digit pct rise in 2009 net profit

* Achieves 50 mln euros of savings from latest plan

* Shares rise more than 9 pct to 11-month high

(Adds share price, CFO, analyst comment, details, background)

By Philip Blenkinsop

BRUSSELS, Aug 26 (Reuters) – Heineken NV , the world’s third-largest brewer, reported a better than expected rise in first-half operating profit on Wednesday, driven by price hikes and cost savings despite lower volumes.

Shares of the maker of Heineken and Amstel, Europe’s number one and three beers, rose as much as 9.3 percent to an 11-month high of 30.45 euros, against an 0.5 percent increase of the DJ Stoxx food and beverage index .

“The figures are much better than expected. They have very strong pricing … That and the cost savings are probably equally impressive,” said Nikolaas Faes, analyst at BNP Paribas.

As with global sector leader Anheuser-Busch InBev NV and world number four Carlsberg A/S , cost control and pricing proved the key to good numbers. [ID:nLD280809] [ID:nL5518053]

Price hikes contributed 6.2 percent to Heineken’s revenue growth, almost offsetting a 6.6 percent volume decline. Wage costs rose slightly but energy/water and marketing costs fell.

The company’s much-watched EBIT (earnings before interest and tax) before exceptionals increased to 993 million euros ($1.4 billion), up a like-for-like 13 percent. The average forecast in a Reuters poll of 15 analysts was 927 million euros.

Heineken said it expected net profit before exceptionals to rise by at least a high single-digit percentage amount for 2009, reflecting further cost savings, price rises (albeit less marked than in the first half), slower growth in Africa and a negative exchange rate impact.

Net profit before one-offs rose 12 percent in the first half.

GROWTH FORECAST

“We are forecasting growth, which is good in the current economic environment, slightly at lower levels than in the first half,” Chief Financial Officer Rene Hooft Graafland told Reuters.

He said volume declined 6.7 percent in the second quarter after 6.3 percent in the first, but said the drop was less marked for the Heineken brand and in the Americas, where Heineken is a premium beer.

By comparison, AB InBev reported a 1.1 percent drop in second-quarter beer volumes, SABMiller Plc’s  underlying beer volumes were flat, while those of Carlsberg fell 6 percent on a like-for-like basis.

Just over half of the Dutch brewer’s revenue last year came from western Europe, where brewers are fighting over a shrinking beer market. There too, the second quarter had been less negative than the first, the CFO said.

“We’re stressing value over volume,” he said.

Heineken involvement in western Europe grew after it bought UK-based Scottish & Newcastle (S&N) with Carlsberg for 7.8 billion pounds ($12.78 billion) in 2008, chiefly getting S&N’s British assets.

Heineken said its “Total Cost Management” (TCM) savings plan had yielded 50 million euros of savings in the first half, equivalent to an annualised 120 million.

“We see substantial opportunity to drive down our cost base in the second half of the year and beyond,” CEO Jean-Francois van Boxmeer said in a statement.

The company has declined to give a target for the programme. Hooft Graafland said an earlier comment that TCM could be as “impactful” as the previous Fit-2-Fight scheme meant Heineken foresaw the same financial impact, of 469 million euros. (Editing by Marcin Grajewski and David Holmes) ($1=.6997 Euro) ($1=.6103 Pound)

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