Heineken Cautious on Coming Year After Earnings, Volumes Miss Expectations — 2nd Update
By Michael Susin
Heineken warned that economic and geopolitical volatility could hurt performance this year after higher pricing pressured 2023 volumes and earnings.
The brewer expects adjusted operating profit to grow organically by a low-to-high single-digit percentage in 2024, reflecting volatile geopolitical and economic conditions, it said. Analysts estimated growth at 9.9%, according to a consensus forecast provided by the company based on input from 22 brokers.
"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.
Heineken expects adjusted net profit organic growth to be lower than adjusted operating profit organic growth, it said.
The guidance seems underwhelming compared to consensus, implying that earnings-per-share forecasts need to decline more than 5%-15%, Citi analysts said in a note.
Both net profit and beer volumes declined more than expected last year. Net profit fell to 2.30 billion euros ($2.46 billion) from EUR2.68 billion, compared with expectations of EUR2.50 billion, according to the consensus forecast provided by the Dutch brewer.
Consolidated beer volumes--including Heineken and more than 300 other brands such as Amstel and Red Stripe--decreased 4.7% organically, worse than market expectations of a 4.3% decline. Volumes of the Heineken brand alone grew 2.5%.
Shares tumbled on the news, trading 5% lower at EUR88.50 at 0916 GMT. The warning also caused shares of Budweiser's owner Anheuser-Busch InBev to fall 1.9%.
"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," Heineken said.
Revenue for the year rose 4.9% to EUR36.375 billion. Net revenue before exceptional items and amortization, or BEIA, fell to EUR30.31 billion from EUR34.64 billion, slightly beating market expectations of EUR30.28 billion. On an organic basis, it rose 5.5%, below market views of 5.7%.
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 on-year profit.
The board declared an unchanged dividend payout of EUR1.73 a share.
Write to Michael Susin at michael.susin@wsj.com
(END) Dow Jones Newswires
February 14, 2024 04:39 ET (09:39 GMT)
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