The Dutch economy has so far fared reasonably well during the global downturn compared with its European contemporaries. However, declining consumer sentiment and a generalised eurozone slowdown are expected to take an increasingly heavy toll during 2009, with real GDP forecast to contract by 3.4% in 2009. In addition, the small Dutch population means that the Netherlands' major food and drink companies often derive the majority of their profits outside of the country and are exposed to markets that have been more heavily impacted by the downturn. A number of food and drink firms have decided against issuing a forecast for 2009, citing the unpredictable conditions. The difficult conditions are certainly being felt by natural and organic food and drink specialist Wessanen, which announced in February that its net profit for the fourth quarter of 2008 was down by 33%. The firm also cancelled its final dividend and refused to give an outlook for 2009. Shortly after the results were announced, the chief executive stepped down citing 'differences of opinion' over strategy. Wessanen's focus on natural and organic categories leaves it exposed during the downturn, when consumers trend towards value, and the firm is reportedly in discussions to sell its US beverage business, ABC, to shore up its balance sheet. Other Dutch multinationals to be impacted by the dour economic environment include Heineken, which announced in February 2009 that its net profits fell by 74% in 2008, having been hit by restructuring costs and impairment charges. Globally, the downturn has had a significant impact on the value of assets in emerging markets and Heineken has been forced to write down the value of its Indian business by EUR200mn and the value of its Russian business by EUR275mn. Heineken's net profits were also hit by EUR125mn in restructuring costs under its 'fit to fight' cost-saving programme and by EUR138mn in restructuring and integration costs related to the takeover of the UK's Scottish & Newcastle (S&N). Anglo-Dutch consumer goods retailer Unilever is another firm that has refused to give financial guidance for 2009, suggesting it would be inappropriate to provide an outlook given the current economic uncertainty. However, unlike Wessanen, Unilever has so far performed reasonably well under the circumstances, with its portfolio of consumer staples giving it some protection against rising price sensitivity. The firm's decision to divest brands exposed to the threat from private labels, including Bertolli olive oil, in February 2008, is also looking increasingly astute, with the private-label sector gaining favour as consumers focus on value. However, the firm's reluctance to issue guidance for 2009 suggests that even these favourable attributes may not be enough to prevent it from succumbing to the downturn, which has concerning implications for the entire food and drink sector.
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