Heineken looks to cut $657m costs

Brussels - Heineken, the world’s third-largest brewer, has launched a €500m cost savings plan, and forecast revenue growth in emerging markets would mitigate higher barley costs this year.

Heineken, which saved €614m under its previous three-year plan, said on Wednesday it would drive operational efficiency and seek synergy benefits from its recently formed global business services unit over the next three years.

The maker of Europe's top-selling Heineken lager and Amstel said 2011 net profit before one-offs was €1.58bn, compared with a forecast for €1.52bn.

Heineken, present in all the problematic eurozone periphery nations including Greece, said it expected to benefit this year from growth in Africa, Latin America and Asia.

The company said it expected a 6% rise in input costs, primarily reflecting higher prices for malted barley.

Brewers tend to hedge input costs a year in advance. So Heineken, like its peers, is set to be hit by a sharp increase in commodity prices in 2011 when future prices for malted barley were 40% higher.

Heineken shares have gained 2.3% this year, in line with the STOXX 600 European food and beverage index, but underperforming peers Anheuser-Busch InBev, Carlsberg and SABMiller [JSE:SAB].

Carlsberg reports full-year results on February 20 and AB InBev on March 8. SABMiller, whose year runs to end-March, has said beer volumes rose 3% in the final three months of 2011, helped by growth in Africa and Latin America.