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Heineken to get Mexico, cost savings boost in 2010

Published 02/15/2011, 07:01 PM
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* Eight months of FEMSA consolidation to boost earnings

* Cost savings, synergy gains expected

* Like-for-like volumes probably declined

* Raw material costs key for 2011

By Philip Blenkinsop

BRUSSELS, Feb 16 (Reuters) - Heineken NV, the world's third-largest brewer, should report sharply higher 2010 earnings on Wednesday as a Mexican acquisition and cost savings outweigh sluggish volumes in mature markets.

Investors will also be keen to hear the Dutch brewer's outlook on rocketing raw materials costs -- likely to be a hot issue in 2011. The futures price for malting barley has risen 51 percent since the launch of such a contract in May.

Heineken's improved results will come despite volumes under pressure from the company's heavy exposure to mature western European markets and some evidence of market-share loss in Russia and the United States.

Rival SABMiller, with a heavy presence in faster-growing African and Latin American markets, said last month its lager volumes rose 3 percent in the final three months of 2010.

Heineken, for whom western Europe made up over half of revenues in 2009, has reported declining volumes on a like-for-like basis in the first nine months of 2010, albeit at a slowing rate -- a trend expected to continue.

However, higher prices in certain areas and costs savings should ensure Heineken's profits rose.

The Dutch brewer's net profit is expected to have risen 31 percent last year, according to the average forecast of a Reuters poll of 11 brokers.

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Heineken itself has forecast a like-for-like increase of at least a low double-digit percentage. In these terms, the rise is likely to be some 13 percent, analysts say.

World number four Carlsberg reports full-year figures on Feb. 21, market leader Anheuser-Busch InBev on March 3. SABMiller, with a financial year running to the end of March, will report full-year earnings on May 18.

(Editing by Erica Billingham)

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