Heineken Holding N.V. reports full year 2014 results

Strong profit growth, delivering on strategic priorities

Amsterdam, 11 February 2015 - Heineken Holding N.V. today announced:

• The net result of Heineken Holding N.V.'s participating interest in Heineken N.V. for 2014 amounts to €760 million;
• Group revenue grew 3.3% organically, with group revenue per hl up 1.4%
• Heineken® premium volume +5.1% with growth across all regions
• Innovation rate accelerated further to 7.7% contributing €1.5 billion of revenues
• Group operating profit (beia) up 7.8% organically
• Consolidated Operating profit (beia) margin expansion of 90bps, ahead of medium term target level
• Net profit (beia) of €1,758 million, 14% higher organically
• Heineken N.V. dividend policy pay-out ratio widened to 30%-40% (from 30%-35%) of Net profit (beia); proposed 2014 total dividend €1.10 per ordinary share (2013: €0.89), implying a 36% pay-out ratio (2013: 32%)

FINANCIAL SUMMARY

¹ As disclosed with the H1 results on 20 August 2014 Group Revenue in 2013 was restated to correctly reflect HEINEKEN share of JV and associates predominantly in AME
² Includes acquisitions and excludes disposals on a 12 month proforma basis
³ Refer to Definitions and Glossary sections for an explanation of non IFRS measures and other terms used throughout this report.

Heineken Holding N.V. engages in no activities other than its participating interest in Heineken N.V. and the management or supervision of and provision of services to that company.

OUTLOOK 2015
(Based on consolidated reporting)
In 2015 HEINEKEN expects a continued challenging external environment, however, delivering on its strategic priorities is expected to drive further organic revenue and profit growth.

Continued revenue growth: HEINEKEN expects positive organic revenue growth in 2015 with volume growth at a more moderate level than 2014, and weighted towards H2 (tougher comparatives in H1).  Continued volume growth in developing markets will offset more subdued volume growth elsewhere. Revenue per hectolitre is expected to increase driven by revenue management. Pricing will be limited by deflationary and off premise pressure in some markets.

Increased commercial investment: HEINEKEN will continue its targeted higher commercial investments across the regions, and expects a slight increase in marketing and selling (beia) spend as a percentage of revenue in 2015 (2014: 12.7%).

Continued cost savings: HEINEKEN is committed to delivering further cost savings and will continue its focus on driving cost efficiencies across the Group. These are an important driver of the medium term margin guidance. As a result of ongoing productivity initiatives, HEINEKEN expects an organic decline in the total number of employees in 2015.

Input cost prices are expected to be slightly lower in 2015 (excluding a foreign currency transactional effect).

Further margin expansion: HEINEKEN continues to target a year on year improvement in consolidated operating profit (beia) margin of around 40bps in the medium term. This will continue to be supported by tight cost management, effective revenue management and the anticipated faster growth of higher margin developing markets. In 2015 consolidated operating profit (beia) margin will be adversely impacted by approximately 25bps from the disposal of EMPAQUE, the Mexican packaging business, announced on 1 September 2014 and expected to complete in Q1.  HEINEKEN expects to partially but not fully offset this, such that in 2015 consolidated operating profit (beia) margin expansion will be somewhat below the 40bps medium term level.

Foreign currency movements: Assuming spot rates as of 6 February 2015, the calculated positive currency translational impact on consolidated operating profit (beia) would be approximately €130 million and €80 million at net profit (beia). However the foreign exchange markets are very volatile.

Improved financial flexibility: HEINEKEN remains focused on cash flow generation and disciplined working capital management, with a commitment to a long-term target net debt/ EBITDA (beia) ratio of below 2.5x. In 2015, capital expenditure related to property, plant and equipment is expected to be approximately €1.6 billion (2014: €1.5 billion). A cash conversion ratio of below 100% is expected in 2015 (2014: 79%).

Interest rate: HEINEKEN forecasts a stable average interest rate of c.3.7% in 2015 (2014: 3.7%)

Effective tax rate: HEINEKEN expects the effective tax rate (beia) for 2015 to be broadly in line with the prior year (2014: 29.7%).

CHANGE IN HEINEKEN N.V. DIVIDEND POLICY AND PROPOSED 2014 DIVIDEND

Following the strong results of 2014 and to reflect confidence in future strong and sustainable cash flow generation Heineken N.V. has decided to widen the pay-out ratio for its annual dividend from 30%-35% to 30%-40% of Net profit (beia). For 2014 a payment of a total cash dividend of €1.10 per share of €1.60 nominal value for 2014 (total dividend 2013: €0.89) will be proposed at the forthcoming AGM of Heineken N.V. If approved, a final dividend of €0.74 per share will be paid on 6 May 2015, as an interim dividend of €0.36 per share was paid on 2 September 2014. The payment will be subject to a 15% Dutch withholding tax.

If Heineken N.V. shareholders approve the proposed dividend, Heineken Holding N.V. will, according to its articles of association, pay an identical dividend per ordinary share. A final dividend of €0.74 per ordinary share of €1.60 nominal value will be payable on 6 May 2015.
The ex-final dividend date for Heineken Holding N.V. ordinary shares will be 27 April 2015.

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. The license fee for the Heineken® brand has been increased since 1 January 2014. To facilitate a meaningful financial and margin comparison compared to last year, the regional impact is reported as a consolidation change in 2014.

Conference call details
Heineken Holding N.V. will host an analyst and investor conference call in relation to its full year 2014 results today at 10:00 CET/ 9:00 GMT. The call will be audio cast live via the website: www.theheinekencompany.com/investors/webcasts. An audio replay service will also be made available after the conference call at the above web address.

Editorial information:
HEINEKEN is the world's most international brewer. It is the leading developer and marketer of premium beer and cider brands. Led by the Heineken® brand, the Group has a powerful portfolio of more than 250 international, regional, local and specialty beers and ciders. HEINEKEN is committed to innovation, long-term brand investment, disciplined sales execution and focused cost management. Through "Brewing a Better World", sustainability is embedded in the business and delivers value for all stakeholders. HEINEKEN has a well-balanced geographic footprint with leadership positions in both developed and developing markets. HEINEKEN employs 81,000 people and operates more than 165 breweries in 70 countries. Heineken N.V. and Heineken Holding N.V. shares trade on the NYSE Euronext in Amsterdam. HEINEKEN has two sponsored level 1 American Depositary Receipt (ADR) programmes: Heineken N.V. (OTCQX: HEINY) and Heineken Holding N.V. (OTCQX: HKHHY). Most recent information is available on HEINEKEN's website: www.theHEINEKENcompany.com and follow via @HEINEKENCorp.

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.