HEINEKEN NV : Heineken N.V. reports 2013 half year results: Resilient performance in challenging market conditions

    HEINEKEN NV : Heineken N.V. reports 2013 half year results: Resilient
                 performance in challenging market conditions

HIGHLIGHTS

  *Group revenue grew 3% including the full consolidation of APB[1];
    organically, group revenue 1% lower with a total volume decline of 3% and
    revenue per hectolitre up 2%
  *Group operating profit (beia) increased 5%; organically, group operating
    profit (beia) was in line with last year
  *Strong underlying performance of APB, with volume growth of 10% and
    operating profit growth of circa 20%; integration successfully completed
  *Developing markets delivered 7% organic operating profit (beia) growth and
    now comprise half of group operating profit (beia)
  *€139 million of pre-tax TCM2 cost savings delivered in the first half of
    2013; additional programme cost savings of €100 million identified
  *Net profit (beia) of €679 million, broadly in line with prior year on an
    organic basis; diluted EPS (beia) declined 1%

CEO STATEMENT

Jean-François van Boxmeer, Chairman of the Executive Board & CEO, commented:
"We continue to operate in a challenging trading environment. While this has
impacted our organic top-line performance, our increased emphasis on higher
growth regions is delivering, with organic operating profit in developing
markets growing 7%. Our ongoing focus on costs has generated a further €139
million of savings in the first half of 2013. Although the volume trends have
improved in July with the warm summer weather in Europe, economic conditions
in several of our core markets continue to constrain consumer spending.
However, we will continue to strengthen our business through sustained brand
investment and a focus on delivering value through on-going revenue management
and cost saving initiatives."

OPERATIONAL OVERVIEW

Key financials[2]                            HY13   HY12  Total Organic growth
(in mhl or € million unless otherwise                   growth              %
stated)                                                       %
Group revenue                              10,375 10,070      3             -1
Group revenue/ hl (in €)                       94     90      4              2
Group operating profit (beia)               1,448  1,378      5              -
Group operating profit (beia) margin        14.0%  13.7% +30bps
Consolidated revenue                        9,354  8,778      7             -3
Consolidated operating profit (beia)        1,327  1,150     15             -2
Net profit (beia)                             679    688     -1              -
Net profit                                    639    766    -17
Diluted EPS (beia) (in €)                    1.18   1.19     -1
Free operating cash flow                      178    345    -48
Net debt/ EBITDA (beia)[3]                   2.9x   2.2x

[1] Asia Pacific Breweries and Asia Pacific Investment Pte Ltd
[2] Refer to the Definitions and Glossary sections for an explanation of
non-IFRS measures and other terms used throughout this report; 2012 financials
have been restated for the impact of revised IAS19
[3] Includes APB on a 12 month combined pro forma basis

Group revenue declined 1% organically, as a 3% decline in group total volume
was only partly offset by a 2% increase in group revenue per hectolitre. The
decline in group beer volume reflects a combination of unseasonably wet and
cold weather conditions and continued weak consumersentiment in Europe and
the U.S. This was further compounded by a moderation in economic growth in key
developing markets and the negative effect of destocking in France following a
substantial excise duty increase in January 2013. Group operating profit
(beia) was in line with prior year on an organic basis. Group operating profit
(beia) margin expansion of 30 basis points was led by the full consolidation
of APB and higher margins in the Americas region. Margins also benefited from
the one-time disposal of assets in Europe.

Heineken® & Innovation       2Q13 Organic HY13 Organic
(in mhl or %)                      growth        growth
                                        %             %
Heineken® in premium segment  7.5      -1  13.3      -3
          Africa Middle East  0.9       7   1.7       4
                    Americas  2.2       -   4.0      -3
                Asia Pacific  1.4      -2   2.9       -
    Central & Eastern Europe  0.8       2   1.2       2
              Western Europe  2.2      -5   3.5      -9
Innovation rate                            6.0%

Heineken® volume in the international premium segment declined by 3% against
strong growth of 6% in the comparable prior year period. Excluding the impact
of one less selling day and destocking in France and the U.S, Heineken® volume
was in line with prior year. The continued success of the 'Open Your World'
campaign and sustained brand investment continue to support strong brand
equity for Heineken®. At the recent Cannes Lions International Festival of
Creativity, the Company won 17 Lion awards, 15 of which were for the Heineken®
brand, including the prestigious Grand Prix for Creative Effectiveness.

HEINEKEN has a strong innovation pipeline and has continued to utilise its
portfolio of global and local brands to drive initiatives which can be rolled
out across multiple markets. In the first half of 2013, the innovation rate
reached 6%, with innovation contributing over €600 million of revenues during
the period. The new 'Radler' product varieties (a mix of beer and 100% natural
juice) were successfully launched in a further 12 markets, bringing the total
number of markets with local 'Radler' beers to 24 across three regions. Our
global cider brand, Strongbow Gold, was launched in Mexico in 2013 with
encouraging early results.

TCM2 Cost Savings (pre-tax) HY13 % of total   Cumulative % of total
(in € million)                       savings (since 2012)    savings
HEINEKEN                      139       100%          335       100%
         Africa Middle East    23        17%          44        13%
                   Americas    38        27%           67        20%
               Asia Pacific    11         8%           11         3%
   Central & Eastern Europe    23        17%           73        22%
             Western Europe    29        20%          100        30%
                Head Office    15        11%           40        12%

TCM2 delivered €139 million of pre-tax cost savings in the first half of 2013.
Supply chain and commerce contributed 59% and 22% of realised cost savings,
respectively. Reduced fixed costs represent approximately two thirds of total
cost savings mainly across supply chain, commerce, wholesale and global
support functions. In the first half of the year, upfront costs related to the
set-up of the GBS organisation were €31 million (including capitalised IT
infrastructure costs of €9 million).
This brings the cumulative amount of upfront GBS costs to €133 million, of
which €104 million has been expensed (primarily in Head Office) and €29
million capitalised.

OUTLOOK STATEMENT

(Based on consolidated reporting)

  *Top-line:For the remainder of the year, economic uncertainty and ongoing
    weak consumer sentiment is expected to persist across many key markets.
    Consequently, although we benefited from better weather conditions in July
    in Western Europe and anticipate improved volumes in some developing
    markets, HEINEKEN does not expect a material change to underlying trading
    conditions across the majority of its markets.
  *Marketing and selling expenses: HEINEKEN still expects marketing and
    selling (beia) expense as a percentage of revenue to remain broadly stable
    in 2013 (2012: 12.2%) demonstrating a continued commitment to invest in
    brands and innovation.
  *Input costs: HEINEKEN still forecasts a slight increase in input cost
    prices in 2013 (excluding the effect of currency translation).
  *Total Cost Management 2 (TCM2): Following the identification of additional
    cost savings, HEINEKEN now expects to realise an approximate €625 million
    (previously €525 million) of cost savings under the 3-year TCM2 programme
    ending 2014. HEINEKEN expects to incur an approximate €70 million of
    upfront Global Business Services (GBS) costs in 2013.
  *Effective tax rate: HEINEKEN still expects the effective tax rate (beia)
    in 2013 to be in the range of 27% to 29% (2012: 26.6% restated for revised
    IAS19). The higher tax rate can be primarily explained by the result of
    favourable outcomes with tax authorities in 2012 and the full
    consolidation of APB which is subject to a higher effective tax rate.
  *Interest rate: HEINEKEN still forecasts an average interest rate of around
    4.5% in 2013 (2012: 5.4%) reflecting lower coupons on recent bond
    issuances.
  *Acquisition of APB: The acquisition of APB is still expected to be
    marginally accretive to earnings per share in 2013.
  *Net profit (beia): HEINEKEN expects netprofit (beia) to be broadly in
    line with last year on an organic basis. The combined impact of
    consolidation changes and foreign currency translation movements are
    expected to reduce full year 2013 net profit (beia) by approximately €25
    million. This includes a negative consolidation impact of €40 million in
    2013 related to revised IAS19.
  *Cash flow/ capital expenditure: In 2013, capital expenditure related to
    property, plant and equipment (including APB) is forecasted to be €1.4
    billion (previously €1.5 billion; 2012: €1.2 billion). HEINEKEN still
    expects a cash conversion ratio of below 100% in 2013. HEINEKEN remains
    committed to achieving its long-term target net debt/ EBITDA (beia) ratio
    of below 2.5 times by the end of 2014.

INTERIM DIVIDEND

In accordance with the existing dividend policy, HEINEKEN fixes its interim
dividend at 40% of the total dividend of the previous year. As a result, an
interim dividend of €0.36 per share of €1.60 nominal value will be paid on 3
September 2013. The shares will trade ex-dividend on 23 August 2013.

DEFINITIONS

Organic growth excludes the effect of foreign currency translational effects,
consolidation changes, accounting policy changes, exceptional items and
amortisation of acquisition-related intangibles. Beia refers to financials
before exceptional items and amortisation of acquisition-related intangibles.
Group figures include HEINEKEN's attributable share of joint ventures and
associates. Organic growth calculations assume HEINEKEN's joint venture share
of 41.9% of APB and 50% of APIPL prior to consolidation is maintained through
to 15 November 2013. Organic growth of consolidated volume, consolidated
revenue and consolidated operating profit (beia) excludes any impact from
APB/APIPL. Organic growth on group volume and group financials includes an
impact from APB/APIPL. Organic growth calculations are adjusted for the
previous 3-month delay reported by APB and APIPL, without a restatement to
2012. Comparative 2012 financials have been adjusted for the impact of revised
IAS19. In 2013, the first time impact of revised IAS19 on operating profit
(beia), EBIT (beia), net profit (beia) and EPS (beia) will be treated as a
non-organic item.

ENQUIRIES

Media                                Investors
John Clarke                          George Toulantas
Head of External Communication       Director of Investor Relations
John-Paul Schuirink                  Aarti Narain
Financial Communications Manager     Investor Relations Manager
E-mail: pressoffice@heineken.com     E-mail: investors@heineken.com
Tel: +31-20-5239355                  Tel: +31-20-5239590
Investor Calendar Heineken N.V.
What's Brewing Seminar, New York     6 September 2013
Trading update for Q3 2013          23 October 2013
Financial Markets Conference, Mexico 5-6 December 2013

Conference call details

HEINEKEN will host an analyst and investor conference call in relation to this
trading update today at 10:00 CET/ 9:00 BST. The call will be audio cast live
via the Company's website: www.theheinekencompany.com/investors/webcasts. An
audio replay service will also be made available after the conference call at
the above web address. Analysts and investors can dial-in using the following
telephone numbers:

Netherlands                        United Kingdom
Local line: +31(0)20 716 8257      Local line: +44 (0)20 34271918
National free phone: 0800 020 2576 National free phone: 0800 279 4977
United States of America
Local line: +1 646 254 3363
National free phone: 1877 280 2296

Participation/ confirmation code for all countries: 8100988

Editorial information:
HEINEKEN is a proud, independent global brewer committed to surprise and
excite consumers with its brands and products everywhere. The brand that bears
the founder's family name - Heineken® - is available in almost every country
on the globe and is the world's most valuable international premium beer
brand. The Company's aim is to be a leading brewer in each of the markets in
which it operates and to have the world's most valuable brand portfolio.
HEINEKEN wants to win in all markets with Heineken® and with a full brand
portfolio in markets of choice. The Company is present in over 70 countries
and operates more than 165 breweries. HEINEKEN is Europe's largest brewer and
the world's third largest by volume. HEINEKEN is committed to the responsible
marketing and consumption of its more than 250 international premium,
regional, local and specialty beers and ciders. These include Heineken®,
Amstel, Anchor, Biere Larue, Bintang, Birra Moretti, Cruzcampo, Desperados,
Dos Equis, Foster's, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star,
Strongbow, Tecate, Tiger and Zywiec. Our leading joint venture brands include
Cristal and Kingfisher. The number of people employed is over 85,000. Heineken
N.V. and Heineken Holding N.V. shares are listed on the NYSE Euronext in
Amsterdam. Prices for the ordinary shares may be accessed on Bloomberg under
the symbols HEIA NA and HEIO NA and on the Reuter Equities 2000 Service under
HEIN.AS and HEIO.AS. HEINEKEN has two sponsored level 1 American Depositary
Receipt (ADR) programmes: Heineken N.V. (OTC: HEINY) and Heineken Holding N.V.
(OTC: HKHHY). Most recent information is available on HEINEKEN's website:
www.theHEINEKENcompany.com.

Disclaimer:
This press release contains forward-looking statements with regard to the
financial position and results of HEINEKEN's activities. These forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors that are
beyond HEINEKEN's ability to control or estimate precisely, such as future
market and economic conditions, the behaviour of other market participants,
changes in consumer preferences, the ability to successfully integrate
acquired businesses and achieve anticipated synergies, costs of raw materials,
interest-rate and exchange-rate fluctuations, changes in tax rates, changes in
law, pension costs, the actions of government regulators and weather
conditions. These and other risk factors are detailed in HEINEKEN's publicly
filed annual reports. You are cautioned not to place undue reliance on these
forward-looking statements, which are only relevant as of the date of this
press release. HEINEKEN does not undertake any obligation to release publicly
any revisions to these forward-looking statements to reflect events or
circumstances after the date of these statements. Market share estimates
contained in this press release are based on outside sources, such as
specialised research institutes, in combination with management estimates.

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Source: HEINEKEN NV via Thomson Reuters ONE
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