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1. Net Revenue BEIA: Grew 5% organically to EUR30 billion.

2. Net Revenue per Hectoliter BEIA: Increased by 3.5%.

3. Beer Volume Growth: Up by 1.6% overall, with premium beer brands growing 5%.

4. Operating Profit BEIA: Grew by 8.3%, with a margin of 15.1%, up 40 basis points.

5. Net Profit BEIA: Improved by 7.3% to EUR2.74 billion.

6. Diluted EPS BEIA: EUR4.89.

7. Dividend: Proposed increase of 7.5% per share to EUR1.87, totaling EUR1.05 billion.

8. Share Buyback Program: New EUR1.5 billion program announced.

9. Free Operating Cash Flow: EUR3.1 billion, a EUR1.3 billion increase from last year.

10. Net Debt-to-EBITDA BEIA Ratio: 2.2 times.

11. Marketing and Selling Investment: Reached 9.8% of net revenue BEIA, up 70 basis points.

12. Regional Highlights:

    • Africa and Middle East: Net revenue BEIA grew 24.5% organically, operating profit BEIA up 31%.

    • Americas: Net revenue BEIA grew 3%, operating profit BEIA up 24.5%.

    • APAC: Net revenue BEIA grew 5%, operating profit increased by 2%.

    • Europe: Net revenue BEIA declined by 1.5%, operating profit BEIA grew 2% organically.

    • Warning! GuruFocus has detected 3 Warning Signs with HKHHF.

    Release Date: February 12, 2025

    For the complete transcript of the earnings call, please refer to the full earnings call transcript.

    Positive Points

    • Heineken Holding NV (HKHHF) achieved broad-based beer volume growth across all four regions, demonstrating strong market presence.

    • The company reported an 8.3% growth in operating profit beia, with a margin increase of 40 basis points to 15.1%.

    • Heineken's premium beer brands grew by 5%, significantly outpacing the overall beer portfolio growth.

    • The company announced a new EUR1.5 billion share buyback program, indicating strong cash flow and shareholder returns.

    • Heineken 0.0, the non-alcoholic beer, grew by 10%, reinforcing the company's leadership in the non-alcoholic segment.

    Negative Points

    • Heineken Holding NV (HKHHF) faces macroeconomic challenges, including weak consumer sentiment in Europe and geopolitical uncertainties.

    • The company experienced a decline in net revenue beia in Europe by 1.5%, partly due to lower intercompany exports.

    • Currency devaluation, particularly in Nigeria and Ethiopia, negatively impacted financial results.

    • The company anticipates mid-single-digit increases in variable costs per hectoliter, which could pressure margins.

    • Despite improvements, the profitability in Africa, especially Nigeria, remains a concern due to economic volatility.

    Q & A Highlights

    Q: What gives you confidence in continuing the trajectory of delivery and absorbing external volatility? A: Dolf van Den Brink, CEO, emphasized the importance of volume growth across all regions, supported by investments in marketing, greenfield breweries, and pricing strategies. He highlighted the company's focus on cost savings, having achieved EUR3.4 billion in savings, which has allowed for increased marketing and digital investments while maintaining margin growth.

    Q: Can you elaborate on the EUR600 million cost savings achieved in 2024 and the initiatives for 2025? A: Harold van den Broek, CFO, explained that the savings exceeded the EUR500 million target due to effective project implementation across regions. For 2025, the company plans to continue optimizing its brewery network, introduce new procurement strategies, and leverage digital investments to drive business returns.

    Q: How do you view the potential for gross margin expansion in 2025 given the mid-single-digit variable COGS guidance? A: Harold van den Broek noted that while pricing will be moderate, the company aims for gross margin expansion through strategic pricing, pack price architecture, and channel mixes. He emphasized the importance of balancing market momentum with affordability.

    Q: What are the scenarios for the 4% to 8% organic operating profit guidance range for 2025? A: Harold van den Broek highlighted potential risks such as tariff structures and volatility in Africa, while opportunities include market momentum and stronghold markets like Vietnam. The guidance reflects current knowledge and anticipates both risks and opportunities.

    Q: Can you discuss the impact of tariffs and the outlook for Mexico and Brazil? A: Dolf van Den Brink explained that Heineken's local-for-local model mitigates tariff impacts, with the US being the primary exposure. He noted strong business performance in Mexico post-elections and a strategic approach to pricing in Brazil, focusing on maintaining price premiums and competitiveness.

    For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.