Heineken N.V.

Full Year Results 2005 Presentation

Full Year Results 2005 2005
Press/Analyst Presentation

22 February 2006

Full Year Results 2005
Jean-François van Boxmeer, Chairman Executive Board

4

Highlights
Organic growth in all key business metrics in 2005: ± Net profit ± Revenues ± EBIT +7.3%, at the top end of our 2005FY profit outlook +2.2%, driven by price, mix and volume improvements +2.9%, driven by top-line growth and costs reductions

± Strong free cash flow generation, cash conversion 120% New management structure in place as per 1 October 2005 Focus 2006: Heineken® to further strengthen its position in the premium segment Leverage aggressively our innovations USA: launch Premium Light®, grow core Heineken® Russia: Strong market position achieved, accelerating integration Targeting ¼200m cost reduction by 2008

6 16.4 14.1 15 9.4 18.7 12.5 Consistent growth in the world¶s most profitable segment 20 20 million hl 15.8 10.7 13.5 19.9 11.5 10 5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 .3 17.2 20.

5% 200 2005 5 + 2.2% + .5% in 2005 versus +4.2% 0 West Euro e Central Euro e USA est of A ericas Africa Asia Pacific .6 Our core strategic asset: the Heineken® brand 2005 was an excellent year for Heineken® Exceeded 20 million hectolitres in the premium segment for the first time Premium volume +4.2% 2 + .1% in 2004 Good growth in all regions Strengthened position in highly profitable West European region Hl mn + .5% stable + . % + .

0 5.7 Heineken is clear leader in the most profitable market segment Heineken Carlsberg Corona Budweiser mstel tella rtois Foster's Tuborg Brahma Beck's 0.0 Based on sales volume sold outside the home market ± 2004 FY .0 10.0 20.0 15.

8 Heineken® Volumes. Revenues Volumes Revenues Heineken® Other brands .

Buckler Italy #1 5. Dreher. Krowelski.2m hl Star. Stepan Razin Poland #2 10. Alfa Spain #1 10. Gulder France #2 6. Amstel. Ichnusa Chile #1 4.6m hl Gösser.8m hl Cruzcampo.3m hl Bir Bintang Source: Plato.9 Our leading market positions and local brands (domestic sales) Netherlands #1 5. Specjal Greece #1 3. > 20% participations * pro-forma. Botcharev PIT.2m hl Pelforth Desperados Austria #1 4. Zipfer Russia #3 12m hl* Ochota.8m hl Amstel. Warka.1m hl Zywiec.6m hl Birra Moretti. Brand Nigeria #1 6. Edelweiss Puntigamer. Escudo Number 1 or 2 Number 3 Indonesia #1 1. on a full year basis .1m hl Amstel. Heineken.2m hl Cristal.

10 Brand portfolios Create strong #1 or #2 market positions latform for the Heineken® brand growth Local brand portfolio should be profitable on its own ortfolio reviews in key completed. resulting in: ± ± uropean and markets On average by 12 of marketing reallocated from non-strategic to winning brands verage K reductions by 20 (only affecting 4 of volume). increasing efficiency in production and marketing .

000 units and over 3 million 4-litre kegs sold in 2005.000 units sold. invest in capacity to meet demand Develop the non-alcohol and low-alcohol segment urope: Buckler 0/0. accelerated rollout to more than 30 markets. roll-out in 3 new markets in 2006 DraughtKeg: 2.000 in 2005) BeerTender: 164.000 installations world-wide in 63 markets (15. in Desperados Mas . handy assion.200.11 Leveraging aggressively our leadership in innovation ³David´ Draught installations: 50.

12 Heineken Volumes 2005 Heineken Brewery Netherlands hipments stable Heineken arehouses ales -0. Heineken is now the 4th largest beer supplier in Heineken marketed remium Light® successfully test On-trade Off-trade *Source Beverage Marketing .2 F M Mexican brands performed strongly at 2.3.3 Independent distributors Beer market ±0.2 Heineken® had a better H2 2005 mstel Light® recovering in Q4 2005 Depletions 1. Including Femsa.2m hl ( 7.9 ± mstel Light® .2 * Depletions of Heineken ± Heineken® 1.4 ).1 1.

000 hl ubstantial incremental marketing budget (¼42m) .13 National roll-out of Heineken remium Light® Light beer 50 of beer consumption Heineken remium Light in test markets has proven its strong potential Favourable results of test markets driven by core Heineken® brand strong reputation and perfect taste profile of Heineken remium Light ® National rollout from March 2006 onwards xpected volume in 2006: 400.

2b invested to date Heineken¶s biggest market by volume: 12m hl 36 brands Clear number 3 player.14 Russia ¼1. with a market share of 14 9 time zones 10 breweries .

mstel. Gösser. Bitburger) Reinforce distribution network combining: ± ± roprietary Independent Integrate organisation Optimise allocation of production and packaging .15 Russia: riorities Building winning brand portfolio ± ± rioritise brands New licensed brands (Guinness. Zlaty Bazant.

16 Commercial Russia .

17 Strong track record in cost control successful and consistent track record in controlling costs Supply chain savings absorbed inflation: production costs ¼32/hl in 2005 compared with ¼36/hl in 1993 32 breweries closed or divested since 1993. aiming at minimising cost of production .3 hl Reduced energy per hectolitre of beer by 10 to 113 Mj T M* in 65 of 108 breweries in 2005. of which 25 in urope Reduced water consumption per hectolitre of beer over the last 5 years by 14 to 5. 80 in 2006 *TPM = Total Productive Management program.

18 Lowering the cost base by ¼200 million Target to reduce fixed cost (excluding marketing) by ¼200m in absolute terms in 2008 compared to 2005 of which ¼65m from existing programmes: ± In all regions and at Head Office ± In the supply chain. wholesale) and support functions ± Global benchmarking study in the support functions is currently being conducted ± Better procurement and slashing general costs ± Level of FT reduction and restructuring costs not yet known . the commercial organisation (incl.

transportation and packaging materials.19 Profit outlook for 2006* Heineken does not expect organic growth in Net Profit for 2006 to exceed mid-single digits: ± Heineken® brand growth and implementation of the outcome of brand portfolio and innovations will drive volume and mix improvements ± ¼200m cost reductions targeted by 2008. only part of which can be passed on to the consumer ± The introduction of Heineken Premium Light® in negative impact on BIT of ¼25m SA will have in 2006 a ± Integration costs and the implementation of the brand portfolio strategy will put temporary pressure on results in Russia * The full text of the full-year profit outlook for 2006 can be found in Heineken 2005 results press release . main effects in 2007/08 ± Higher oil price will affect cost of energy.

Member of the Executive Board and CFO .Financial Review 2005 René Hooft Graafland.

in 2004: ¼8m).283 1.392 112. .377 5.1 18. in 2004: ¼8m).6 10.21 Key figures 2005 (million of hl/¼ million) 2005 Group beer volume 2004 Increase Organic growth 118.5 4.796 1.062 1.6 10.8 2.3 7.3 1.2 Revenues BIT* BIT beia Net Profit** Net Profit beia 2.3 * Includes exceptional items before tax in 2005: -¼102m ( in 2004 there was no exception item at BIT level) and amortisation of brands (in 2005: ¼7m. ** Includes exceptional items after tax in 2005: -¼72m ( in 2004: ¼153m) and amortisation of brands (in 2005: ¼7m.9 319 761 840 334 642 803 7.369 1.6 1.3 -6.

6 currencies 10.5 consolidation 2.22 Revenues (¼ million) 11000 10600 10200 9800 10. 2 2.796 2004 FY 2005 FY .2 Organic growth 0.0 Price/mix volumes 0.062 9400 9000 4.

7% growth consolidation 1.5% currencies 2.9% organic 1.23 EBIT (beia) (¼ million) 1500 1400 1300 1200 -3.377 1100 1000 900 1.392 2004 FY 2005 FY .

of which ¼30m is related to new marketing and innovation programmes Depreciation increased by 6. in-line with the ¼100m as announced in February 2005 Marketing and selling costs up 60 basis points to 12. partly as a result of investments in new draught beer installations. of which +1. coolers and filling lines for DraughtKegs and BeerTender kegs .8 organically.24 Increased market investments in 2005 Incremental investments in marketing and innovation.1 due to higher volumes and changes in packaging mix.5 Revenues of Packaging costs increased by 4.5 .

25 Net Profit (beia) (¼ million) 900 850 800 750 700 650 600 2004 FY 2005 FY 0.7 consolidation -3.4 7.3 organic growth currencies 803 840 .

26 Strong Free Cash Flow Generation Excellent cash con ersion rate ¼ million 1200 1000 800 600 60 400 200 0 2003 2004 2005 40 20 0 Free perating Cash Flow et pro it beia be ore min nterests Cash con ersion rate and good NWC Days C management 120 103 97 140 120 100 80 25 20 15 10 5 0 22 8 16 8 11 6 2003 2004 2005 2003 data are Dutch Gaap .

gaining share in the premium segment ¼50m cost reduction programme Western Europe: ¼24m savings achieved in 2005 Cost saving programme in the Netherlands completed: costs reduced by ¼35m Head count reduced by more than 1. Heineken® +7% France:Heineken® +5%.1 -0.660 565 change -0. 4. 13 560 004 3 .9 Underlying EBIT (beia) of the operating companies improved Heineken® in premium segment: +3.5 4.27 Western Europe Volumes Beer volumes (m hl) Revenues (¼m) EBIT (beia) (¼m) 005 3 .5% EBIT (beia) Spain: Strong market: all brands up.9 1.000 FTEs 41 .

profits up .6 2.5 2.5 Central Europe shows robust growth EBIT (beia) increased due to: ± Mix improvement resulting from brand portfolio reviews EBIT (beia) 22 ± Significant cost savings.28 Central and Eastern Europe Volumes Beer volumes (m hl) Revenues (¼m) EBIT (beia) (¼m) 2005 45.526 264 change 6. mainly in purchasing Synergy realisation at BBAG on track: ¼55m of ¼80m realised Heineken® in premium segment +6. 10.2% Poland: Higher EBIT driven by better price/sale mix and tight cost control Romania and Hungary: Good progress in turn-around.796 05 2004 42.7 15.

733 256 Revenues (¼m) EBIT (beia) (¼m) 2004 14.0 13 Heineken® in premium segment +1. Heineken® grew by 22% . EBIT substantially up. below growth rate of import segment ± New management Heineken USA in place ± Clear labels and new advertising introduced ± Performance improved in H2 2005 Chile and Argentina: Volumes +8%.29 The Americas Volumes Beer volumes (m hl) 2005 15.5 1.1 1.9 14.3 -12.5% EBIT lower mainly due to forex impact (-¼67m) EBIT (beia) 18 USA: ± Depletions up 1.2%.516 291 change 3.

5 18. but increase in costs Cost reductions in Middle East is priority for 2006 .9 13 EBIT improved slightly as good performance in Nigeria was offset by cost pressure in Egypt Heineken® in premium segment +8.30 Africa and Middle East Volumes Beer volumes (m hl) 2005 15.2% EBIT (beia) 1 Nigeria: EBIT up significantly: ± Portfolio review and strong pricing ± Efficiency improvements flowing through Egypt: ± Positive volume development.0 1.052 198 Revenues (¼m) EBIT (beia) (¼m) 200 13.5 889 187 change 11.3 5.

6 4.31 Asia Pacific Volumes Beer volumes (m hl) 2005 10.8 502 73 Revenues (¼m) EBIT (beia) (¼m) 2004 9.3 9 Heineken® premium brand: +12.5 471 70 change 13. Taiwan (+20%) Investments in breweries in Mongolia and Sri Lanka .4 6.3% EBIT slightly up despite additional marketing investments China: EBIT (beia) 5 ± Robust volume growth in Shanghai and Hainan ± Price pressure continues Rest of Asia: ± Profits up in all markets ± Strong Heineken® growth in Vietnam (+20%).

Grow core Heineken® Russia: Strong market position achieved.32 Heineken: Summary 2005 Organic net profit growth in 2005 at the top end of outlook statement The Heineken® brand exceeds 20m hl mark Strong cash flow generation Western Europe: best performing international brewer Central Europe solid growth Focus 2006: Heineken® to further strengthen its position in premium segment Leverage aggressively our innovations USA: launch Premium Light®. accelerating integration Targeting ¼200m cost reduction by 2008 .

33 Commercial .

Questions please .

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Appendix .

China MCS/APB. Russia Stepan Razin. Russia Fe sa. Israel . nited States Te po.37 Expanding the business: Acquisitions and Partnerships in 2005 Acquisitions and green field invest ents: ürzburger. Russia nited Breweries Lanka. er an Ivan Taranov. Mongolia (green field) Partnerships: uinness Stout. Russia Patra. Russia Baikal. Sri Lanka Jiangjsu DaFuHao.

2 5.2 3.8 7.7 6.2 .2 6.6 4.7 8.8 10.7 4.2 8.38 Information on core beer markets 2005 Country Spain Poland Germany United States (incl. Femsa) France Russia** Nigeria Netherlands Italy Austria Chile Greece * includes export ** Includes pro-rata volumes of companies acquired and consolidated for the first time Volumes in hl millions* 10.8 5.

2 3.1 11.4 2.0 1.7 1.6 2.7 1.4 5.8 2.39 Heineken¶s top-selling brands 2005 Brand Heineken ® (premium) Amstel Cruzcampo Heineken ® (mainstream) Star Ochota Cristal Zywiec Primus Moretti Gulder Tatra Pils Specjal Tiger Sales Volume hl millions 20. Ghana Poland Poland Asia .6 2.6 2.4 Country International International Spain Netherlands Nigeria Russia Chile Poland Congo Italy Nigeria.1 2.5 1.

7 4.857m) .6 8.0 3.8 1. benefits Gross fin.5 0.7 0.5 Total Equity 2004 2005 2005 2004 Net debt position 2005 : ¼2.5 Fixed Assets Other liabilities Provisions and Pers.8 3.8 10.0 3.647m (2004 : ¼2.7 2. debt Equity and Liabilities 11.40 Balance Sheet 2005 (¼ billion) Assets 11.8 10.0 2.5 7.6 Current Assets Cash 3.3 2.6 1.

124 .79 .26 1.67 -1 +23 .39 -1 +16 * Assuming $ spot rate at 31 December 2006 corresponds with the hedging rate ** Hedging at 21 February 2006 *** Including the costs of hedging .13 1.41 US Dollar Hedging Position USD million Net Inflow Hedged Part** Hedged Rate*** Impact ¼ million EBIT Net Profit 2004A 2005A 2006F 2007F 772 767 733 767 772 767 652 90 1.23 2004A 2005A 2006F* 2007F* .27 1.