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Heineken Says 3Q Sales Weak But Profits Up

Dutch brewer said underlying sales dipped but profits rose during third quarter on a mix of cost savings, volume growth in Asia and Africa, and price increases.

AMSTERDAM (AP) -- Heineken NV, the Dutch brewer, said Wednesday that underlying sales dipped but profits rose during the third quarter on a mix of cost savings, volume growth in Asia and Africa, and price increases.

The family-controlled company, which has only begun issuing quarterly trading updates this year, said its "organic growth in net profit before exceptional items and amortization of brands" -- a nonstandard measure -- was up "slightly more than 10 percent" from the same period a year ago. It did not provide figures.

In the trading update, Heineken repeated forecasts for profits to rise at least 10 percent for the whole year on that basis.

It said revenues were up 13 percent from a year ago to €4.62 billion ($6.38 billion) due to its $7.8 billion acquisition in April of Mexican beer maker Femsa, owner of brands such as Dos Equis, Tecate and Sol. Excluding this factor, revenues fell 2.1 percent as a 3.1 percent drop in volume outweighed a 1 percent rise in prices.

"Overall volumes and the organic volume decline were weaker than expected with weakness in some of Heineken's large markets," analyst Richard Withagen of SNS Securities said in a note Wednesday. "Still, profitability was broadly in line with expectations, which enabled Heineken to reiterate its full-year guidance." He rates shares a Hold.

Shares fell 3.8 percent to €36.565 in Amsterdam.

Heineken painted a picture of growth in emerging markets contrasted with stagnation in wealthy nations.

Volumes in Western Europe -- where Heineken is Britain's largest brewer with its Scottish & Newcastle brand -- were weak due to bad weather and poor consumer confidence.

In the Americas "volume growth in Latin America, the Caribbean and Canada largely compensated for lower volume growth in the U.S.A., where the economic environment continues to affect beer consumption," Heineken said in a statement.

In August, the maker of Amstel and Murphy's had reported first half 2010 net profit of €695 million, including a €121 million gain from the sale of businesses, and revenues of €7.52 billion.
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