Dutch Brewer Reveals Slump in Profits

Thu, 19 Feb 2009

Global brewer Heineken is to cut its capital expenditure as it struggles to cope with a slump in the global consumption of alcohol . The Netherlands based company is to cut expenditure from €1.1 billion to €700 million this year, with property, manufacturing equipment and newly acquired businesses set to be most dramatically affected.

The announcement follows the revelation of plummeting profits in a year that saw Heineken made over €750 million of writedowns. In 2008, Heineken’s profits fell by 74 per cent to €209 million. The results have increased scrutiny on the company’s expensive acquisition of Scottish and Newcastle in a joint £7.8 billion deal with Carlsberg last year, which saw the Dutch company acquire Scottish and Newcastle’s UK assets.

Jean-Francois van Boxmeer, the chairman of Heineken, said, ‘Our business is robust but not immune from the challenges posed by the global economic downturn. Therefore, we have in place a rigorous, company-wide focus on cash generation and cost reduction.’

Mr Boxmeer added, ‘The exceptional economic circumstances required us to reduce the value of goodwill in Russia, our investment in India and in our UK pub portfolio. These non-cash exceptional charges, together with lower profit contributions of new businesses and the related financing costs resulted in substantially lower reported net profit.’
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