Heineken Warns of Tough Backdrop After Profit Misses Expectations — Update

By Michael Susin

Heineken said net profit fell by more than expected after higher pricing hit its volumes and warned that economic and geopolitical volatility could hurt its performance this year.

The Dutch brewer said net profit was 2.30 billion euros ($2.46 billion) in 2023 compared with EUR2.68 billion a year earlier and expectations of EUR2.50 billion, according to a consensus forecast provided by the company and based on the estimates of 22 brokers.

Consolidated beer volumes--which includes Heineken and more than 300 other brands such as Amstel, Red Stripe, Sol or Desperados--decreased 4.7% organically, worse than market expectations of a 4.3% decline. Volumes of the Heineken brand grew by 2.5%.

"After a strong 2022, 2023 proved to be challenging. Strong pricing to offset very high input and energy cost inflation and volatile macro-economic conditions in some key markets affected our volume momentum," it said Wednesday.

Revenue for the year rose 4.9% to EUR36.375 billion. Net revenue before exceptional items and amortization, or BEIA, grew organically by 5.5% to EUR30.31 billion from EUR34.64 billion in 2022, slightly beating market expectations of EUR30.28 billion.

Adjusted operating profit slipped to EUR4.44 billion from EUR4.50 billion, missing expectations of EUR4.46 billion, while the adjusted operating margin shrank to 14.7% from 15.7% a year ago.

Organic consolidated operating profit grew by 1.7%, beating analysts' expectations of flat growth.

The board declared an unchanged dividend payout of EUR1.73 a share.

Looking ahead, Heineken expects adjusted operating profit to grow organically in the range of a low- to high-single-digit percentage, reflecting volatility in geopolitical and economic conditions, it said. The company expects adjusted net profit organic growth to be lower than adjusted operating profit organic growth, it said.

"We remain cautious about the global economic and geopolitical outlook. Our focus going forward will be on revenue growth, balanced between volume and value, by continuing to invest behind our brands, innovations, commercial capabilities and route-to-consumer to deliver long-term sustained value creation," Chief Executive Officer Dolf van den Brink said.

Write to Michael Susin at michael.susin@wsj.com

(END) Dow Jones Newswires

February 14, 2024 02:09 ET (07:09 GMT)

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