Heineken’s profits could fall significantly below analyst estimates due to geopolitical and economic volatility, the brewer said on Wednesday.
The announcement caused its shares to fall by 5.7%.
On average, analysts expect the Dutch company to achieve 9.9% operating profit growth over the coming year, helped by decreasing costs compared to last year.
Heineken has said, however, that growth could be anywhere between a low and high single-digit percentage due to the volatile global environment.
It already warned that tough economic conditions could impact demand in some markets this year.
‘Cautious’
Speaking on the company’s full-year statement results, Heineken chief executive Dolf van den Brink said, “We remain cautious about the global economic and geopolitical outlook.”
He added that Heineken aims to drive revenue by a balance of volumes and prices.
Beer makers across the sector raised prices significantly in 2023 to offset cost increases, hurting volumes.
Heineken’s volumes organically fell 4.7% in 2023.
Declines in Vietnam and Nigeria drove more than 60% of the fall, where economic and political conditions impacted sales.
In July, the company cut its 2023 forecast, citing turmoil in those two markets. Today’s 2024 guidance has failed to offer signs of improvement.
‘Underwhelming’
Royal Bank of Canada analyst James Edward Jones described the latest guidance as “underwhelming” due to the expectation of “a significant margin tailwind” as commodity costs fall.
Heineken made clear its intention to focus on restoring volumes, part of which would be by investing in its brands.
Costs are expected to continue rising, it said, adding that it will deliver at least €500 million in gross savings in 2024 – €100 million ahead of target.
In 2023, Heineken reported a 1.7% rise in organic operating profit, beating analyst expectations.
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