Dutch brewer Heineken NV reported Wednesday a 20 percent increase in net profit for the first half of 2009 after booking a one-time gain on the repurchase of distressed debt at one of its subsidiaries.
Analysts said the results were better than expected for a seller of premium beer during a time of economic malaise and the company's shares jumped 8.6 percent to ⁈in early Amsterdam trading.
Net profit was ⁈llion ($700 million), compared with ⁈llion in the same period a year earlier. Heineken booked one-time gains of ⁈lion this year after repurchasing debt at the pub-managing arm of Scottish & Newcastle, which Heineken bought for ⁈illion in May 2008.
Sales rose 11 percent to ⁈illion, boosted by the Scottish & Newcastle buy, which made Heineken the largest brewer in Britain.
The company said that comparing the same operations in both years, sales would have fallen 0.4 percent. Sales volumes dropped 5.6 percent amid the economic downturn but the company successfully hiked prices.
"The strength of our brand portfolio has enabled us to support our margins, achieving a stable top line performance despite lower volumes," said chief executive Jean-Francois van Boxmeer in a statement.
"In difficult economical times, Heineken has delivered a relatively good performance and clearly ahead of consensus expectations," said analyst Kris Kippers of Petercam Bank in a note on the earnings.
"Compared to our estimates, the numbers were clearly better in Africa and certainly the U.S."
However, he said that shares appear fairly valued at current levels and repeated a "Hold" recommendation.
He said that hiking prices to keep up sales is a strategy that may have run its course.
"Going forward, this will become increasingly difficult as the effect of past price increases will fade and the price gap with non-premium beers should certainly not widen."
Van Boxmeer said the integration of Scottish & Newcastle was now complete. The company said it expects business conditions to remain difficult in the second half of the year.
"Heineken remains cautious on the development of global beer consumption and expects year-on-year volume declines in many markets in the second half of 2009 as a result of rising unemployment and lower disposable incomes," the company said.
The company said it plans to defend the prices of its main brands via advertising, and keep profit margins steady by cutting costs.
Heineken, which is family-controlled, reports earnings twice annually.