Heineken gets a boost as S&N buy bears fruit

Heineken today toasted a surge in profits as it started to benefit from its share of UK brewer Scottish & Newcastle which it bought with Carlsberg for £7.8 billion last year.

In the deal, Dutch brewer Heineken took over S&N's UK operations including Foster's, John Smiths and Kronenbourg 1664 while Danish rival Carlsberg took the Russian and French operations.

Heineken, the world's third-largest brewer, said the takeover helped it report a 20% rise in profits to 993 million (£870 million) for the first half of the year.

It admitted the profits were driven by cost savings as beer sales fell in the recession. It stripped out 50 million of costs in the first half through brewery closures and slashed marketing expenses.

Chairman and chief executive Jean-François van Boxmeer said: "The integration of S&N is now completed. There are clear signs that our specific plans to improve profitability and to strengthen our long-term market position in the UK are bearing fruit."

However, he warned: "The economic and trading conditions remain difficult, and there will be continued pressure on volumes in the second half of 2009."

Heineken has a 26% share of the UK market where beer sales fell 6.2% in the first half. It has put up prices to restore margins and added Amstel and Tiger beers to its regular UK portfolio.