Heineken's operating profit in Europe rises on price increases and cost-cutting 

Heineken shares slid over 6% as the brewer said its 2024 profit could fall significantly below analyst estimates.

Heineken beer volumes fell in Europe in 2023, but operating profit rose in the key division nonetheless, helped by price hikes and cost-cutting, the latest financial figures from the global brewing giant show. 

The brewer also said that following the concerns about inflationary costs and price increases in 2023, it was "cautious" about the year ahead, as it weighed economic and political risks around the world. It also signalled, however, that the strong cost pressures in 2023 had been easing in the last six months of the year.  

In the Europe division, net revenues rose 6.3% to €12.2bn even as beer volumes fell, while operating profit increased in the division by just under 12% to €1.35bn.   

In the division, "operating profit grew 11.9% organically as price-led revenue growth, better on-trade mix and significant cost savings across our operating companies, including the supply chain network transformation, more than offset the material inflationary pressures in our input and energy costs and continued investment in marketing and sales", the brewer said.

Global revenues rose by just under 5% to €36.37bn in the year. Global beer by volume across its products fell by 4.7%, and after accounting for savings of €800m, the brewer posted operating profits of almost €3.3bn, which was up by 1.7% from the previous year. 

"After a strong 2022, 2023 proved to be challenging," chairman and chief executive Dolf van den Brink said in the earnings statement. 

"Strong pricing to offset very high input and energy cost inflation and volatile macro-economic conditions in some key markets affected our volume momentum," he said. 

"Notwithstanding these difficult conditions, we continued investing in our brands and capabilities. We gained or held volume market share in over half of our markets as volume performance moderately improved quarter by quarter." 

The company said that in 2023 it was forced "to prioritise pricing to offset unprecedented levels of commodity and energy inflation, often leading the market, which impacted consumer off-take". 

However, "during the second half, we saw pricing moderate and volume trends sequentially improve in the majority of our markets", it said. 

The CEO said that its focus "going forward will be on revenue growth, balanced between volume and value, by continuing to invest behind our brands, innovations, commercial capabilities and route-to-consumer to deliver long-term sustained value creation".  

Share prices

Heineken shares slid over 6% as the brewer said its 2024 profit could fall significantly below analyst estimates owing to geopolitical and economic volatility. 

Analysts on average expect the world's second-largest brewer to achieve 9.9% organic operating profit growth over the coming year, helped by decreasing costs from last year's high level.

Heineken, however, said growth could be anywhere between a low and high single-digit percentage.

 Additional reporting Reuters