Key Highlights
Revenue €36,375 million, up 4.9%
Net revenue (beia) 5.5% organic growth; per hectolitre 10.8%
Beer volume -4.7% organic growth; Heineken® volume 2.5% (excluding Russia 3.4%)
Gross savings €0.8 billion for 2023 and €2.5 billion cumulatively versus 2019
Operating profit €3,229 million; operating profit (beia) 1.7% organic growth
Operating profit (beia) margin 14.7%
Net profit €2,304 million; net profit (beia) -4.3% organic growth
Diluted EPS (beia) €4.67
Full year 2024 outlook: low- to high-single-digit operating profit (beia) organic growth
CEO Statement
Dolf van den Brink, Chairman of the Executive Board / CEO, commented:
“I am proud of the resilience of our business and our people, and encouraged by our progress on the EverGreen priorities. 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. Notwithstanding these difficult conditions, we continued investing in our brands and capabilities. We gained or held volume market share in over half of our markets as volume performance moderately improved quarter by quarter. We recorded operating profit (beia) organic growth in 3 out of 4 regions while we adapted to the challenges in Asia Pacific.
We continue to make progress on our EverGreen priorities. The Heineken® brand celebrated its 150 year anniversary and delivered another year of volume growth, up 3.4% excluding Russia. We made excellent progress with our digital business-to-business platforms and now capture close to €11 billion of gross merchandise value. We significantly beat our productivity commitment, delivering €0.8 billion of gross savings in 2023. We also further evolved our portfolio footprint with the acquisition of Distell and Namibia Breweries to form Heineken Beverages, a new beverages champion for Southern Africa, and the exit from Russia in the third quarter.
Looking to 2024, we remain cautious about the global economic and geo-political 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.”
Financial Summary1
Revenue 36,375 4.9 %
Revenue (beia) 36,310 4.6 %
Net revenue 30,362 5.7 %
Net revenue (beia) 30,308 5.5 %
Operating profit 3,229 -24.6 %
Operating profit (beia) 4,443 1.7 %
Operating profit (beia) margin (%) 14.7 %
Net profit 2,304 -14.1 %
Net profit (beia) 2,632 -4.3 %
Diluted EPS (in €) 4.09 -12.3 %
Diluted EPS (beia) (in €) 4.67 -5.2 %
Free operating cash flow 1,759
Net debt / EBITDA (beia)3 2.4x
1 Consolidated figures are used throughout this report, unless otherwise stated. Please refer to the Glossary for an explanation of non-GAAP measures and other terms. Page 26 includes a reconciliation versus IFRS metrics. These non-GAAP measures are included in internal management reports that are reviewed by the Executive Board of HEINEKEN, as management believes that this measurement is the most relevant in evaluating the results and in performance management..
2 Organic growth shown, except for Diluted EPS (beia), which is total growth.
3 Includes acquisitions and excludes disposals on a 12-month pro-forma basis.
Outlook 2024
As we continue to advance on our EverGreen journey, we remain committed to our medium-term ambition to deliver superior growth, balanced between volume and value, and to drive continuous productivity improvements to fund investments behind EverGreen and enable operating profit (beia) to grow ahead of net revenue (beia) over time.
Our volume performance at the closing of 2023 was under pressure from external factors, with a moderate sequential improvement quarter by quarter. For 2024, we expect the macroeconomic environment and geopolitical developments to remain a factor of uncertainty that may impact our business. In this context, our focus going forward will be on restoring our volume growth by continuing to invest behind our brands, innovations, commercial capabilities and route-to-consumer.
We expect our variable costs to increase by a low-single-digit on a per hectolitre basis, benefitting from lower commodity and energy prices, but more than offset by local input cost inflation and currency devaluations, particularly in Africa. We also expect higher than historical average wage inflation to impact our cost base.
Our continuous productivity programme will deliver at least €500 million of gross savings in 2024, ahead of our medium term commitment of €400 million for the near-term, enabling investments behind our growth agenda, our digital transformation, strategic capabilities and our Brew a Better World activities.
Overall, we expect to grow operating profit (beia) organically in the range of a low- to high-single-digit. The wide range corresponds to the volatility in geo-political and economic conditions we have also witnessed in the past months and the fact that we will continue to invest behind EverGreen for long-term sustained value creation.
We also expect:
An average effective interest rate (beia) of around 3.5% (2023: 3.4%)
Other net finance expenses to further increase, mainly due to the impact from significant devaluations and the scarcity of hard currency in some key emerging markets, like we are experiencing currently in Nigeria
An increase in our effective tax rate (beia) to around 29%, mainly driven by changes in tax laws in Brazil (2023: 26.8%).
The factors above result in a net profit (beia) organic growth that is lower than the operating profit (beia) organic growth.
Finally, we expect investments in capital expenditure related to property, plant and equipment and intangible assets to be below 9% of net revenue (beia) (2023: 8.8%)
Total Dividend For 2023
The Heineken N.V. dividend policy is to pay a ratio of 30% to 40% of full year net profit (beia). For 2023, a total cash dividend of €1.73 per share, a similar amount to last year (2022: €1.73), representing a payout ratio of 36.8%, within the range of our policy, will be proposed to the Annual General Meeting on 25 April 2024 (“2024 AGM”). If approved, a final dividend of €1.04 per share will be paid on 7 May 2024, as an interim dividend of €0.69 per share was paid on 10 August 2023. The payment will be subject to a 15% Dutch withholding tax. The ex-dividend date for Heineken N.V. shares will be 29 April 2024.
Translational Calculated Currency Impact
The translational currency impact for 2023 was negative on net revenue (beia) by €864 million and on operating profit (beia) by €102 million and positive on net profit beia by €6 million.
Applying spot rates as of 12 February 2024 to the 2023 financial results as a base, the calculated currency translational impact would be negative, approximately €440 million in net revenue (beia), €60 million at operating profit (beia), and positive by €40 million at net profit (beia).