Heineken N.V. reports on 2023 first-quarter trading
Amsterdam, 19 April 2023 – Heineken N.V. (EURONEXT:
HEIA; OTCQX: HEINY) publishes its trading update for the first
quarter of 2023.
- Revenue growth 9.2%
- Net revenue (beia)
organic growth 8.9%; per hectolitre 12.3%
- Beer volume -3.0%
organic growth
- Heineken® volume
growth 2.3% (5.7% excluding Russia)
- Gross merchandise
value captured via eB2B platforms +51%
- Outlook for the
full year unchanged; operating profit (beia) expected to grow
organically mid- to high-single-digit
Dolf van den Brink, Chairman of the
Executive Board / CEO, commented:
"We start the year with strong revenue growth driven by pricing
and disciplined revenue management, while we materially increase
investment behind our brands. Business performance in Europe and
the Americas regions is encouraging, with consumer demand holding
up better than expected in the first quarter. Results in the Asia
Pacific and Africa, Middle East and Eastern Europe regions were
disappointing, hindered by temporary volatility in Vietnam and
Nigeria, leading to demand softness.
We continue to make consistent progress on EverGreen. Heineken®
volume was up 5.7% excluding Russia, Heineken® Silver grew 47% and
was launched in the United States. We obtained the final regulatory
approval in South Africa, and we look forward to welcoming over
5,400 new colleagues of Distell and Namibian Breweries into
HEINEKEN and to add more than €1 billion in net revenue and €150
million operating profit to our African footprint. Our eB2B
platforms captured €2.3 billion in gross merchandise value this
quarter, 51% more than last year, and 6 markets have completed the
transition under the brand name eazle, business made easy. HEINEKEN
was included in the 2023 Bloomberg Gender-Equality Index for our
commitment and progress towards a fair, inclusive and equitable
workplace and world.
We see the economic environment as volatile and uncertain,
making us vigilant and focused. Our gross savings programme
continues at force, providing fuel to invest behind our strategy.
All in all, our full year expectations remain unchanged."
Revenue for the first quarter of 2023 was
€7,632 million (2022: €6,989 million). Net revenue
(beia) was €6,378 million and increased by 8.9%
organically, with total consolidated volume declining by 3.1% and
net revenue (beia) per hectolitre up 12.3%. Price mix on a constant
geographic basis increased by 12.1%, driven by pricing to offset
inflation across all regions and revenue and mix management.
Currency translation positively impacted net revenue (beia) by €104
million or 1.8%, mainly driven by the Mexican Peso and the
Brazilian Real. Consolidation changes had a small positive impact
in net revenue (beia) of €10 million.
Revenue1 |
|
|
|
|
|
|
|
|
(in € million or %) |
|
1Q23 |
|
Total growth |
|
Organic growth |
|
1Q22 |
Revenue (IFRS) |
|
7,632 |
|
9.2% |
|
|
|
6,989 |
Net revenue (beia) |
|
6,378 |
|
|
|
8.9% |
|
5,753 |
Beer volume declined 3.0% organically versus
last year. The Americas region continued positive growth momentum,
offset by declines in the Africa, Middle East and Eastern Europe
and Asia Pacific regions driven by temporary external factors in
our key markets of Vietnam and Nigeria. Volume in Europe performed
ahead of our expectations for the quarter.
Beer
volume |
|
|
|
|
|
|
(in mhl or %) |
|
1Q23 |
|
Organic growth |
|
1Q22 |
Heineken N.V. |
|
54.8 |
|
-3.0% |
|
56.4 |
Africa, Middle East & Eastern Europe |
|
9.0 |
|
-8.3% |
|
9.8 |
Americas |
|
20.3 |
|
3.4% |
|
19.7 |
Asia Pacific |
|
10.3 |
|
-10.5% |
|
11.5 |
Europe |
|
15.2 |
|
-2.3% |
|
15.5 |
Driving premiumisation at scale, led by
Heineken®
Premium beer volume fell by 5.7%, driven by the
decline in Vietnam and stopping sales of Heineken® in Russia.
Strong underlying momentum in premiumisation continued elsewhere,
led by
Heineken®, which
grew 2.3% in volume, significantly outperforming our portfolio.
Heineken® grew by double-digits
in more than 25 markets. Growth was mainly driven by Brazil and
China, and was partially offset by the decline in Russia.
Heineken® 0.0
declined by a low-single-digit, with strong growth momentum in
Brazil, the USA, the UK, Spain and the Netherlands, offset by the
decline in Russia. Notably, our consumer-centric innovation
Heineken® Silver
continued its strong growth, including double-digit growth in
Vietnam and China. We also continued the global expansion and
launched Heineken®
Silver in the USA, with a taste proposition
specially designed for US consumers. Overall,
Heineken® Silver grew by 47%.
Heineken®
volume |
|
|
|
|
(in mhl or %) |
|
1Q23 |
|
Organic growth |
Heineken N.V. |
|
12.2 |
|
2.3% |
Africa, Middle East & Eastern Europe |
|
1.3 |
|
-23.9% |
Americas |
|
5.4 |
|
10.3% |
Asia Pacific |
|
2.3 |
|
16.3% |
Europe |
|
3.1 |
|
-4.3% |
Build a future-fit digital
route-to-consumer
Our business-to-business digital (eB2B)
platforms aim to create a superior customer experience to
drive demand through better service and with productivity gains. We
continue to deploy these platforms at speed and in the first
quarter of this year our platform solutions captured €2.3 billion
in gross merchandise value, an increase of 51% versus the
comparable period last year. The growth was mainly driven by
Mexico, Vietnam, Brazil, the Netherlands, Nigeria and Italy. We now
connect over half a million active customers, 100 thousand more
than in the comparable period last year. In this quarter we began
migrating our eB2B platforms under a single brand name:
eazle, business made easy. The transition to the new brand
is now live in the UK, Italy, Ireland, France, Spain and Austria.
eazle will enable better features at scale, resulting in improved
customer experience and better performance, helping customers to
grow their business.
Africa, Middle East & Eastern Europe
- Net revenue
(beia) grew 3.6% organically, with total consolidated
volume declining 8.6% and net revenue (beia) per hectolitre up
13.4%. Price mix on a constant geographic basis was up 14.4% driven
by strong pricing across the region to offset inflation,
particularly in Ethiopia, and continued positive mix impact from
premiumisation.
- Beer
volume decreased organically by 8.3% with a significant
decline in Nigeria and South Africa, only partially offset by a
strong performance in Ethiopia. Premium beer volume excluding
Russia declined by a low-single-digit and grew in half of our
markets.
- In
Nigeria, net revenue (beia) declined in the
low-teens, with pricing only partially offsetting a total volume
decline in the mid-twenties, in line with the market. The economy
suffered from temporary lack of availability of local currency,
caused by an immediate withdrawal of old bank note denominations,
impacting consumers' ability to purchase goods. We expect the
situation to improve as the validity of the old bank notes has been
restored until the end of 2023 alongside the redesigned banknotes.
Despite these challenges, the premium portfolio grew by a
mid-single-digit, with Desperados more than doubling volume versus
the same period last year.
- In
Ethiopia, net revenue (beia) grew by more than
sixty percent, led by strong pricing and volume growth. Beer volume
grew in the high-teens, and we further secured our market
leadership positions, led by Harar and Walia. The premium portfolio
grew in the thirties, led by Bedele Special. Ethiopia continues to
be a hyperinflation country.
- In South
Africa, net revenue (beia) declined by a mid-single-digit
as strong pricing and mix development was partially offset by a
mid-teens total volume decline. A severe disruption at our brewery
in Sedibeng due to a boiler breakdown impacted volume performance
in the quarter. After a long process, on 9 March, the South African
Competition Tribunal approved HEINEKEN's offer to acquire control
of Distell Group Holdings Limited (Distell), paving the way for the
creation of a Southern African beverage champion. The transaction
with Distell and Namibian Breweries Limited (NBL) is expected to be
completed next week on 26 April.2
- In
Egypt, net revenue (beia) grew in the high-teens,
driven by pricing. Total volume grew with a mid-single-digit, led
by the growth of the non-alcoholic portfolio. Beer volume declined
with a low-single-digit.
- We continue to make progress to transfer the ownership of our
business in Russia and an application has been
submitted for approval to the authorities in the Russian Federation
in-line with local regulatory requirements. There is a limit to
what we can say before this process is completed. If and when we
have approval, we will share further details about the buyer and
agreement.
Americas
- Net revenue
(beia) grew 14.8% organically, with total consolidated
volume up 3.1% and net revenue (beia) per hectolitre up 12.0%.
Price mix on a constant geographic basis was up by 13.6%, led by
pricing in Brazil and Mexico and continued premiumisation of the
portfolio.
- Beer
volume increased organically by 3.4% in the quarter led by
Brazil, Mexico, Panama and Ecuador. Our premium portfolio grew by a
high-single-digit, led by Heineken® in Brazil and the USA, and
Amstel Ultra in Mexico.
- In
Mexico, net revenue (beia) grew in the mid-teens,
driven by pricing and volume growth. Beer volume grew by a
low-single-digit. Premium beer volume increased in the
low-twenties, led by Sol Mezclas, Amstel Ultra and Heineken®
Silver.
- In
Brazil, net revenue (beia) grew in the
mid-twenties, driven by pricing, premiumisation and volume growth.
Beer volume grew by a high-single-digit, ahead of the market. Our
premium and mainstream beer portfolio continued to outperform and
grew in the mid-teens, led by Heineken® and Amstel. The economy
beer portfolio declined by a high-single-digit.
- In the USA, net
revenue (beia) grew by a low-single-digit, driven by pricing and
mix management, more than offsetting a mid-single-digit decline in
volume. Heineken® depletions grew by a low-single-digit, driven by
the continued momentum of Heineken® 0.0, up in the mid-teens, and
the launch of Heineken® Silver.
Asia Pacific
- Net revenue
(beia) declined 5.4% organically, with total consolidated
volume declining 10.5% and net revenue (beia) per hectolitre up
5.8%. Price mix on a constant geographic basis was up 4.7%, mainly
driven by pricing across most markets.
- Beer
volume declined organically by 10.5% in the quarter,
impacted by the declines in Vietnam and Cambodia. Whilst the
premium portfolio declined in the low-twenties driven by Vietnam,
other markets contributed to an underlying mid-teens growth for the
quarter.
- In
Vietnam, net revenue (beia) declined in the
low-twenties, driven by lower volume. Following the steep
post-COVID recovery of the market last year, we built stock levels
ahead of an early Tet in 2023, expecting this momentum to continue.
This momentum was halted early 2023 due to an economic slowdown,
attributed in part to the real estate and export sectors. On a
sell-out basis, our brand portfolio performed broadly in line with
the market. Heineken® Silver and Tiger Crystal grew in the
high-teens and by more than thirty percent, respectively.
- In
India, net revenue (beia) grew by a
high-single-digit organically, driven by volume growth and pricing.
Beer volume grew by a mid-single-digit, led by Kingfisher. The
premium portfolio grew in the high-teens, led by Kingfisher Ultra
and Heineken® Silver.
- In
China, Heineken® grew by close to fifty percent,
with a strong performance of Heineken® Original and Heineken®
Silver. Heineken® 0.0 will be introduced in China later this
year.
- In
Cambodia, net revenue (beia) declined in the
high-teens, driven by lower volume. Beer volume declined in the
low-twenties, in line with the market, as the economy was off to a
slow start this year. Premium beer volume grew by a
low-single-digit, led by Tiger.
- In
Malaysia, beer volume increased by a
low-single-digit versus last year, led by Tiger. The premium
portfolio outperformed, led by Heineken®.
- In Indonesia, net
revenue (beia) grew in the low-teens, driven by volume growth,
pricing and premiumisation. Beer volume grew by a mid-single-digit,
ahead of the market, despite poor weather in the first quarter.
Heineken® grew in the mid-teens versus last year.
Europe
- Net revenue
(beia) grew 13.5% organically, with total consolidated
volume down 1.3%, performing ahead of our expectations as consumers
remain resilient so far despite continued pressure from inflation
across consumer goods. Net revenue (beia) per hectolitre increased
by 13.9%. Price mix on a constant geographic basis was up by 13.6%
driven by pricing, earlier than the industry and offsetting the
continued impact of inflation, and premiumisation.
- Beer
volume declined organically by 2.3%, with
high-single-digit volume growth in the on-trade more than offset by
a mid-single-digit decline in the off-trade, partially affected by
a shift in promotional activity in some markets towards later in
the year. Our premium portfolio was broadly flat, with continued
momentum on our Next Generation brands Birra Moretti, Beavertown,
Messina, El Aguila, Texels and Gallia.
- In the
UK, net revenue (beia) grew by a mid-single-digit,
driven by pricing and premiumisation. Total volume declined by a
high-single-digit, mainly driven by the off-trade. On-trade volume
also declined, impacted by outlet closures. Our premium portfolio
grew by a high-single-digit, led by Birra Moretti and
Beavertown.
- In
France, net revenue (beia) grew by a
mid-single-digit, led by pricing and premiumisation. Total volume
was down by a mid-single-digit. Our premium beer portfolio
performed in line with total volume.
- In
Spain, net revenue (beia) grew in the
low-twenties, driven by pricing and mid-single-digit volume growth.
Our premium portfolio grew by a low-single-digit, led by El
Águila.
- In
Italy, net revenue (beia) grew in the
low-twenties, with volume up by a mid-single-digit and pricing to
offset inflation. The solid growth was led by Heineken® and
Messina.
- In
Poland, net revenue (beia) grew close to twenty
percent, with pricing more than offsetting a low-single-digit
volume decline. Beer volume and the premium portfolio declined by a
low-single-digit, outperforming the market.
- In the Netherlands,
net revenue (beia) grew in the low-teens, with strong pricing and
mix benefits from premiumisation more than offsetting a
high-single-digit volume decline. Our premium portfolio was broadly
flat, led by double-digit growth in Birra Moretti and Texels.
The reported net profit for the first three months of 2023 was
€403 million (2022: €417 million).
We continue to experience the effects of a volatile global
economy and remain cautious about the impact this has on consumer
demand. At the same time, we are focused on strengthening our
business in line with our EverGreen strategy, including investing
behind our brands and innovations, and delivering upon our gross
savings ambitions.
Following the start of the year, we see signals of a relatively
resilient Europe and risks of slower economic growth in Asia
Pacific, thus performance across markets may be different than
anticipated. All in all, our full year outlook remains unchanged,
and we expect operating profit (beia) to grow organically mid- to
high-single-digit. We also expect that the growth in operating
profit (beia) will come mainly, if not fully, in the second half of
the year.
|
Consolidation impact of Newco in South Africa |
HEINEKEN expects to consolidate the businesses resulting from
the transaction with Distell and NBL as of 1 May 2023. The
prospectus and other useful information can be found on our
dedicated webpage for the Distell and NBL transaction, including
the Newco Group Ownership Structure (Page 34 of the Prospectus) and
the Pro Forma of Newco (Page 162 of the Prospectus).
On 27 March, the Threshold Scheme Conditions of the transaction
have been fulfilled, confirming that the shareholding of HEINEKEN
in Newco would be 65%. As a result, the consolidation of the newly
acquired assets will imply:
- Adding the in-scope
assets of Distell and NBL
- Recognising the
non-controlling interests of minorities of 40.63% in NBL and 35% in
Newco
- Removing the
non-controlling interest of NBL in HEINEKEN South Africa (HSA) and
the share of profits in associates and joint ventures from
HEINEKEN's current minority position in NBL.
The table below illustrates, directionally, the impact of the
consolidation using the full year results of HEINEKEN for 2022 and
the Pro Forma financial information of Newco Group for the 12-month
period concluded in June 2022 at an exchange rate of 19.95 ZAR per
Euro.
Impact of the consolidation of Newco into HEINEKEN -
Illustrative |
In millions of € |
HEINEKEN (beia) |
Consolidation impact |
Consolidation impact (%) |
Revenue |
34,643 |
1,632 |
4.7% |
Excise tax expense |
(5,949) |
(499) |
|
Net Revenue |
28,694 |
1,133 |
3.9% |
Total net other expenses |
(24,192) |
(971) |
|
Operating profit |
4,502 |
161 |
3.6% |
Net interest
income/(expenses) |
(380) |
(7) |
|
Other net
finance income/(expenses) |
(63) |
— |
|
Share of profit
of assoc./JVs |
263 |
1 |
|
Income tax
expense |
(1,124) |
(50) |
|
Non-controlling interests |
(363) |
(56) |
|
Net profit |
2,836 |
48 |
1.7% |
Diluted EPS (in €) |
4.92 |
0.08 |
1.7% |
The illustration above considers the following:
- Pro Forma figures of
Newco shown in the consolidation impact are reported figures. No
adjustments are made related to accounting changes in Distell or
NBL to align to HEINEKEN's policies, beyond those identified in the
Newco Pro Forma
- The Strongbow
business is included in HEINEKEN's full year results of 2022, which
is committed to be disposed of by Newco. Please refer to page 159
of the Prospectus for an indication of the financial information of
Strongbow
- All transaction
costs and adjustments from the Purchase Price Allocation in the
Newco Pro Forma are considered as exceptional items and thus
excluded from the consolidation impact, although it is expected
that adjustments to depreciation will not be treated as
exceptional
- The minority shareholding of HEINEKEN
in Capevin is excluded.
|
Translational Currency Calculated Impact |
Based on the impact to date, and applying spot rates of 17 April
2023 to the 2022 financial results as a baseline for the remainder
of the year, the calculated negative currency translational impact
for the full year of 2023 would be approximately €640 million in
net revenue (beia), €90 million at operating profit (beia) and €40
million at net profit (beia).
|
Reconciliation of non-GAAP measures |
In the internal management reports, HEINEKEN uses the measure of
net revenue (beia).
Reconciliation net revenue (beia) |
|
|
|
|
In millions of € |
|
1Q23 |
|
1Q22 |
Revenue (IFRS) |
|
7,632 |
|
6,989 |
Excise tax
expense |
|
(1,253) |
|
(1,236) |
Net revenue |
|
6,379 |
|
5,753 |
Exceptional items included in net revenue |
|
(1) |
|
— |
Net revenue (beia) |
|
6,378 |
|
5,753 |
Note: due to rounding, this table will not always cast
Media |
|
Investors |
Sarah
Backhouse |
|
José
Federico Castillo Martinez |
Director of
Global Communication |
|
Director of
Investor Relations |
Michael
Fuchs |
|
Mark
Matthews / Chris Steyn |
Corporate &
Financial Communication Manager |
|
Investor Relations
Manager / Senior Analyst |
E-mail:
pressoffice@heineken.com |
|
E-mail:
investors@heineken.com |
Tel:
+31-20-5239355 |
|
Tel:
+31-20-5239590 |
HEINEKEN will host an analyst and investor conference call with
Harold van den Broek, Chief Financial Officer, in relation to its
First Quarter 2023 Trading Update and the transaction in South
Africa today at 14:00 CET/ 13:00 GMT. The call will be audio cast
live via the company’s website: www.theheinekencompany.com. An
audio replay service will also be made available after the
conference call at the above web address. Analysts and investors
can dial-in using the following telephone numbers:
United Kingdom (Local): 020 3936 2999
Netherlands (Local): 085 888 7233
USA (Local): 646 664 1960
All other locations: +44 203 936 2999
Participation password for all countries: 683288
Editorial information: HEINEKEN is the world's most
international brewer. It is the leading developer and marketer of
premium and non-alcoholic beer and cider brands. Led by the
Heineken® brand, the Group has a portfolio of more than 300
international, regional, local and specialty beers and ciders. With
HEINEKEN’s over 85,000 employees, we brew the joy of true
togetherness to inspire a better world. Our dream is to shape the
future of beer and beyond to win the hearts of consumers. We are
committed to innovation, long-term brand investment, disciplined
sales execution and focused cost management. Through "Brew a Better
World", sustainability is embedded in the business. HEINEKEN has a
well-balanced geographic footprint with leadership positions in
both developed and developing markets. We operate breweries,
malteries, cider plants and other production facilities in more
than 70 countries. Most recent information is available on our
Company's website and follow us on LinkedIn, Twitter and
Instagram.Market Abuse Regulation
This press release contains inside information within the
meaning of Article 7(1) of the EU Market Abuse Regulation.
Disclaimer: This press release contains forward-looking
statements based on current expectations and assumptions with
regard to the financial position and results of HEINEKEN’s
activities, anticipated developments and other factors. All
statements other than statements of historical facts are, or may be
deemed to be, forward-looking statements. Forward-looking
statements also include, but are not limited to, statements and
information in HEINEKEN’s non-financial reporting, such as
HEINEKEN’s emissions reduction and other climate change related
matters (including actions, potential impacts and risks associated
therewith). These forward-looking statements are identified by
their use of terms and phrases such as “aim”, “ambition”,
“anticipate”, “believe”, “could”, “estimate”, “expect”, “goals”,
“intend”, “may”, “milestones”, “objectives”, “outlook”, “plan”,
“probably”, “project”, “risks”, “schedule”, “seek”, “should”,
“target”, “will” and similar terms and phrases. These
forward-looking statements, while based on management's current
expectations and assumptions, are not guarantees of future
performance since they are subject to numerous assumptions, known
and unknown risks and uncertainties, which may change over time,
that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements. Many of
these risks and uncertainties relate to factors that are beyond
HEINEKEN’s ability to control or estimate precisely, such as but
not limited to future market and economic conditions, the behaviour
of other market participants, changes in consumer preferences, the
ability to successfully integrate acquired businesses and achieve
anticipated synergies, costs of raw materials and other goods and
services, interest-rate and exchange-rate fluctuations, changes in
tax rates, changes in law, environmental and physical risks, change
in pension costs, the actions of government regulators and weather
conditions. These and other risk factors are detailed in HEINEKEN’s
publicly filed annual reports. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only of
the date of this press release. HEINEKEN assumes no duty to and
does not undertake any obligation to update these forward-looking
statements contained in this press release. Market share estimates
contained in this press release are based on outside sources, such
as specialised research institutes, in combination with management
estimates.
1 Refer to the Glossary for an explanation of organic growth and
other terms used throughout this report. 2 Page 5 of this press
release includes an illustration of the consolidation effects of
this transaction on HEINEKEN.
- Please click on the PDF to download the full press release
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