Heineken N.V. (EURONEXT: HEIA; OTCQX: HEINY) announces:
KEY HIGHLIGHTS
- Revenue €17,823 million
- Net revenue (beia) 6.0% organic growth; per hectolitre 4.3%
- Beer volume organic growth 2.1%; Heineken® volume 9.2% growth
- Operating profit €1,542 million; operating profit (beia) organic growth 12.5%
- Diluted EPS (beia) €2.15; up 5.9%
- Outlook for the full year updated: operating profit (beia) expected to grow organically in the range of 4% to 8%.
"We delivered a solid first half of the year, organically growing net revenue (beia) 6% and operating profit (beia) 12.5%. The Americas region stood out, as portfolio mix and major ongoing saving initiatives resulted in a strong operating profit improvement, notably in Brazil and Mexico. APAC returned to growth, led by India and with the Vietnamese beer market stabilizing. We are actively navigating volatility in Africa. In Europe we gained market share in the majority of our markets and beer volume was slightly up compared to last year despite poor weather in June.
Our EverGreen strategy continues to shape our business. Premium beer volume grew 5%, led by the Heineken® brand, up 9%. Heineken® was proud to receive a record 22 awards from the Cannes Lions Festival. We consolidated leadership in the Low & No-alcohol category, with Heineken® 0.0 up 14%. We are firmly on-track to deliver €0.5 billion gross savings for 2024, enabling us to invest in growing the category and in building strong brands.
In the second half, we will materially step-up investment in market and sales expenditures, with notable increases in key markets. We update our full year outlook to grow operating profit (beia) organically in the range of 4% to 8%, reflecting our confidence in delivery and commitment to invest behind growth and to future-proof our business.
Dolf van den Brink, Chairman of the Executive Board / CEO"
Financial Summary
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 Statements
Our EverGreen strategy is a multi-year journey, and we are pleased with the solid progress in the first half of 2024. While several key emerging markets had to navigate a volatile macroeconomic environment, overall, we achieved more balanced, volume- and value-led revenue growth, and good operating leverage. We also continue to deliver against our premiumisation, digital and sustainability ambitions, funded by gross savings and productivity gains.
We continue to expect variable costs to increase organically by a low-single-digit on a per-hectolitre basis. While we expect to benefit from lower commodity and energy prices compared to 2023, this is more than offset by local input cost inflation and currency devaluations, particularly in Africa. We also expect higher than historical average wage inflation.
Across the company, our markets and functions realized more than €300 million of gross savings in the first half. We have clear line of sight on our cost saving initiatives and are therefore confident to achieve our c.€500 million ambition for 2024, ahead of our medium-term commitment of €400 million per year.
We are reinvesting a larger proportion of these savings into marketing and sales. In the second half, we will materially step-up investment in our brands focused on our greatest opportunities for long-term sustainable growth. Notable increases will be in Mexico, Brazil, Vietnam, India, and South Africa.
At the same time, volatility remains a reality. Consumer confidence and economic sentiment in developed markets remain below their historical average. In the Africa & Middle East region there is a risk of material currency devaluation in Ethiopia and hyperinflation in Nigeria and Egypt. We are confident we are able to adapt, yet this continues to bring some short-term uncertainty.
Reflecting our confidence in delivery and commitment to invest behind growth and in future-proofing our business, we update our full year outlook to grow operating profit (beia) organically in the range of 4% to 8%.
For the full year of 2024, we further expect:
- An effective interest rate (beia) of around 3.5% (2023: 3.4%).
- As indicated at our earlier outlook statement, other net finance expenses will increase compared to 2023. This is driven primarily by the impact from significant devaluations andhard currency scarcity in key emerging markets. We made progress in reducing hard currency exposures and are on track with the rights issue in Nigerian Breweries Ltd. If current conditions prevail, we expect more stable other net financing expenses in the second half of the year.
- We have updated our view on the average effective tax rate (beia), and now expect this to land at around 28% (2023: 26.8%), an improvement relative to the previous guidance of 29%, including further insights into Brazil's 2024 tax law changes.
- Given the factors above, we revise the expected organic net profit (beia) growth to be more closely in line with the expected operating profit (beia) growth.
- Finally, we continue to 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%).