Heineken: caution on its 2024 outlook

(AOF) – Heineken (-5.48% to 88.02 euros) declines in Amsterdam following a mixed performance in 2023. The Dutch brewer explains in particular that “the volume of beer experienced an organic drop of 4, 7% over this period. Vietnam and Nigeria accounted for more than 60% of this decline, with both markets affected by difficult economic conditions. But the group says it has gained or retained market share in volume in more than half of its markets in 2023. Its net profit decreased by 4.3% to 2.63 billion euros, compared to 2.83 billion euros. euros in 2022.

In 2023, earnings per share fall by 5.2% to 4.67 euros compared to 4.92 euros in 2022.

On the other hand, operating profit increased by 1.7% to 4.43 billion euros, a margin of 14.7%. The Dutch brewer’s revenues increased by 4.9% to 36.375 billion euros from 34.64 billion euros in 2022.
Its net revenues increased by 5.5% organically, thanks to a 10.8% increase in revenue per hectoliter.

Commenting on Heineken’s results, UBS highlights that the brewing group posted results below expectations in the fourth quarter of 2023. Over this quarter, Heineken achieved organic turnover up +4.8% to 7.77 billion euros (compared to a consensus of +5.7%), with volumes down 3.2% (compared to -2.1% expected).

UBS expects Heineken share price to fall

Remaining Buy on Heineken with an unchanged price target of 101 euros, the broker anticipates a decline in the stock, although the 2023 organic EBIT was higher than expectations (+1.7% against a consensus of 0 %) and that the forecasts for the 2024 financial year are generally in line with expectations.

UBS explains this possible decline due to disappointing volume in the fourth quarter and also significantly lower than expected forecasts regarding other net financial costs (revaluation of exchange rates on debts) and a higher tax rate.

Alongside the publication of its annual results, Heineken announces that a total cash dividend of 1.73 euros (an amount similar to that of 2022) will be proposed at the annual general meeting of April 25, 2024.

In terms of outlook, the brewing group forecasts organic growth in operating profit between 1 and 9% in 2024, specifying that the macroeconomic environment and the evolution of the current geopolitical situation remain a factor of uncertainty likely to have an impact on his activity.

In this context, Heineken is committed to restoring its volume growth by continuing to invest in its brands.

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