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1. Net Revenue BEIA Growth: 5% organic growth, reaching EUR30 billion.

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

3. Total Beer Volume Growth: Up by 1.6%.

4. Operating Profit BEIA Growth: 8.3% organic growth, with a margin of 15.1%.

5. Net Profit BEIA Growth: 7.3% increase, totaling 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: 9.8% of net revenue BEIA, up 70 basis points.

12. Premium Beer Brands Growth: 5% growth, led by Heineken, up almost 9%.

13. Heineken 0.0 Growth: 10% increase.

14. Regional Highlights:

    • Africa and Middle East: Net revenue BEIA grew 24.5% organically.

    • Americas: Operating profit BEIA up 24.5%.

    • APAC: Net revenue BEIA grew 5%, beer volume up 4%.

    • Europe: Operating profit BEIA grew 2% organically.

    • Warning! GuruFocus has detected 2 Warning Sign with HEINY.

    Release Date: February 12, 2025

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

    Positive Points

    • Heineken NV (HEINY) achieved broad-based beer volume growth across all four regions, with notable gains in market share.

    • The company reported strong profit growth and cash flow generation, enabling increased cash returns to shareholders, including a dividend exceeding EUR1 billion and a new EUR1.5 billion share buyback program.

    • Heineken NV (HEINY) made significant investments in marketing and selling, as well as in digital and technology platforms, supported by productivity programs.

    • The Heineken brand continued its momentum with an 8.8% growth, and Heineken 0.0 grew by 10%, reinforcing its leadership in the nonalcoholic beer category.

    • The company achieved over EUR600 million in gross savings in 2024, surpassing its target, which helped fund increased marketing investments and improve profitability.

    Negative Points

    • Heineken NV (HEINY) faced challenges in Europe, with net revenue declining by 1.5% due to lower intercompany exports and consumer sentiment impacting growth.

    • The company experienced currency translation impacts, particularly from the devaluation of the Nigerian Naira and depreciation of the Brazilian real and Mexican peso.

    • Despite improvements, the profitability in Africa, especially in Nigeria, remains a concern due to high inflation and currency devaluation.

    • The company anticipates continued macroeconomic challenges in 2025, including weak consumer sentiment in Europe and geopolitical fluctuations.

    • Heineken NV (HEINY) acknowledged that the pace of margin expansion in Brazil and the Americas may not be sustainable at the current rate.

    Q & A Highlights

    Q: What gives Heineken confidence in continuing its growth trajectory despite external volatility? A: Dolf van Den Brink, CEO, emphasized the importance of volume growth as a core driver, supported by investments in marketing, greenfield breweries, and systemic cost savings. He highlighted the EUR3.4 billion in cost savings achieved, which allowed for increased marketing investments and margin improvements, creating a growth flywheel that Heineken aims to maintain in 2025.

    Q: Can you elaborate on the EUR600 million cost savings achieved in 2024 and the initiatives planned 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, Heineken plans to continue optimizing its brewery network, introduce new procurement strategies, and leverage digital technology for business returns, aiming for at least EUR400 million in savings.

    Q: How does Heineken plan to manage variable costs and gross margin expansion in 2025? A: Harold van den Broek noted that while Africa faces high inflation and currency devaluation, pricing strategies are in place to manage these challenges. Outside Africa, pricing will be moderate to maintain market momentum. Heineken aims for gross margin expansion through strategic pricing and cost management.

    Q: What are the expectations for Heineken's performance in Vietnam and the broader outlook for 2025? A: Dolf van Den Brink reported positive volume momentum in Vietnam, with growth in both on- and off-premise channels. Heineken's premium and mainstream portfolios are performing well. For 2025, the company anticipates continued macroeconomic challenges but expects operating profit growth in the 4% to 8% range, with risks and opportunities considered.

    Q: How is Heineken addressing challenges in Africa, particularly in Nigeria and South Africa? A: Dolf van Den Brink highlighted structural adjustments in Nigeria, including cost restructuring and portfolio transformation, to position for future growth. In South Africa, post-Distell acquisition, Heineken is focusing on volume growth and profitability improvements, with a multi-category model being replicated in other African markets.

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

This article first appeared on GuruFocus.