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Heineken Holding N.V.
Earnings Release • Feb 14, 2024
3849_iss_2024-02-14_1f93163d-3a87-4406-907f-b5311dbfc339.pdf
Earnings Release
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Heineken Holding N.V. reports 2023 full year results
Amsterdam, 14 February 2024 – Heineken Holding N.V. (EURONEXT: HEIO; OTCQX: HKHHY) announces:
Key Highlights
- The net result of Heineken Holding N.V.'s participating interest in Heineken N.V. for 2023 amounts to €1,174 million
- Revenue €36,375 million, up 4.9%
- Net revenue (beia) 5.5% organic growth; per hectolitre 10.8%
- Beer volume -4.7% organic growth; Heineken® volume 2.5% (excluding Russia 3.4%)
- Gross savings €0.8 billion for 2023 and €2.5 billion cumulatively versus 2019
- Operating profit €3,229 million; operating profit (beia) 1.7% organic growth
- Operating profit (beia) margin 14.7%
- Net profit €2,304 million; net profit (beia) -4.3% organic growth
- Diluted EPS (beia) €4.67
- Full year 2024 outlook: low- to high-single-digit operating profit (beia) organic growth
| Financial Summary1 | |||||
|---|---|---|---|---|---|
| IFRS Measures | € million | Total growth |
BEIA Measures | € million | Organic growth2 |
| Revenue | 36,375 | 4.9 % | Revenue (beia) | 36,310 | 4.6 % |
| Net revenue | 30,362 | 5.7 % | Net revenue (beia) | 30,308 | 5.5 % |
| Operating profit | 3,229 | -24.6 % | Operating profit (beia) | 4,443 | 1.7 % |
| Operating profit (beia) margin (%) | 14.7 % | ||||
| Net profit of Heineken Holding N.V. | 1,174 | Net profit (beia) | 2,632 | -4.3 % | |
| Diluted EPS (in €) | 4.12 | Diluted EPS (beia) (in €) | 4.67 | -5.2 % | |
| Free operating cash flow | 1,759 | ||||
| Net debt / EBITDA (beia)3 | 2.4x |
1 Consolidated figures are used throughout this report, unless otherwise stated. Please refer to the Glossary for an explanation of non-GAAP measures and other terms. Page 13 includes a reconciliation versus IFRS metrics. These non-GAAP measures are included in internal management reports that are reviewed by the Executive Board of HEINEKEN, as management believes that this measurement is the most relevant in evaluating the results and in performance management.
2 Organic growth shown, except for Diluted EPS (beia), which is total growth. 3 Includes acquisitions and excludes disposals on a 12-month pro-forma basis.
HEINEKEN's focus throughout 2023 required HEINEKEN to respond to challenging market conditions, whilst remaining focused on the deployment of HEINEKEN's EverGreen strategy. HEINEKEN does this to future-proof and deliver superior, balanced growth in a fast-changing world, with an ambition to become the best digitally connected brewer, raise the bar on sustainability and responsibility and evolve HEINEKEN's operating model, capabilities and culture. HEINEKEN also focuses on productivity to fund the investments required and progressively improve profitability and capital efficiency.
Over time, HEINEKEN aims for a healthy balance between volume and value growth, achieved by building and scaling premium and strategic core mainstream brands everywhere, innovating in fast-growing consumer segments and further developing HEINEKEN's geographic and portfolio footprint. This year, HEINEKEN had to prioritise pricing to offset unprecedented levels of commodity and energy inflation, often leading the market, which impacted consumer off-take. During the second half, HEINEKEN saw pricing moderate and volume trends sequentially improve in the majority of HEINEKEN's markets.
Revenue for the full year was €36.4 billion (2022: €34.7 billion) a total increase of 4.9%. Net revenue (beia) increased by 5.5% organically, with net revenue (beia) per hectolitre up 10.8% and total consolidated volume declining by 4.7%. The underlying price-mix on a constant geographic basis was up 10.2%, driven by pricing for inflation and positive mix effects. Currency translation negatively impacted net revenue (beia) by €864 million or 3.0%, mainly from the devaluation of currencies in emerging markets partially offset by a stronger Mexican Peso. Consolidation effects
positively impacted net revenue (beia) by €887 million or 3.1%, mainly from the consolidation of Distell and Namibia Breweries.
Beer volume declined 4.7% organically for the full year. Vietnam and Nigeria represented over 60% of the decline, with both markets affected by challenging economic conditions. HEINEKEN gained or held volume market share in more than half of HEINEKEN's markets in 2023.
Beer volume
| (in mhl) | 4Q23 | 4Q22 | Organic growth |
FY23 | FY22 | Organic growth |
|---|---|---|---|---|---|---|
| Heineken N.V. | 59.4 | 63.3 | -3.2 % | 242.6 | 256.9 | -4.7 % |
In the fourth quarter, net revenue (beia) grew organically by 4.8%. Total consolidated volume declined by 3.2%, improving sequentially relative to the third quarter. Beer volume declined organically by 3.2%, driven by declines in Asia Pacific, Africa and Europe, partially offset by modest volume growth in the Americas. HEINEKEN's exit volume momentum was a low-single-digit decline adjusted for the pre-Tet season trade loading at the end of 2022 that led to an overstock in the first quarter of 2023. More than half of HEINEKEN's markets grew volume in the last quarter. Net revenue (beia) per hectolitre was up 8.2% organically with price-mix on a constant geographic basis up 7.6%, driven by pricing and positive mix effects.
Premium beer volume declined by 5.9% organically, mainly driven by Vietnam and HEINEKEN's exit from Russia. Outside of these markets premium beer grew by 1.1%, outperforming the total portfolio in the majority of HEINEKEN's markets. This growth is led by Heineken®, complemented by HEINEKEN's international and local premium brands including El Aguila, Birra Moretti, Kingfisher Ultra and Bedele Special.
Heineken® continued to lead our portfolio and grew volume by 2.5% versus last year (3.4% excluding Russia). Growth was broad-based across 39 markets, most notably in China, Brazil, Ethiopia, Indonesia and Taiwan. Heineken® Silver is now present in 50 markets with a volume growth in the high thirties, led by China, Vietnam and the USA.
| Heineken® volume | Organic | |||
|---|---|---|---|---|
| (in mhl) | 4Q23 | growth | FY23 | Organic growth |
| Total | 15.4 | 4.0 % | 56.3 | 2.5 % |
Outlook 2024
As HEINEKEN continues to advance on HEINEKEN's EverGreen journey, HEINEKEN remains committed to its mediumterm ambition to deliver superior growth, balanced between volume and value, and to drive continuous productivity improvements to fund investments behind EverGreen and enable operating profit (beia) to grow ahead of net revenue (beia) over time.
HEINEKEN's volume performance at the closing of 2023 was under pressure from external factors, with a moderate sequential improvement quarter by quarter. For 2024, HEINEKEN expects the macroeconomic environment and geopolitical developments to remain a factor of uncertainty that may impact HEINEKEN's business. In this context, HEINEKEN's focus going forward will be on restoring its volume growth by continuing to invest behind its brands, innovations, commercial capabilities and route-to-consumer.
HEINEKEN expects its variable costs to increase by a low-single-digit on a per hectolitre basis, benefitting from lower commodity and energy prices, but more than offset by local input cost inflation and currency devaluations, particularly in Africa. HEINEKEN also expects higher than historical average wage inflation to impact its cost base.
HEINEKEN's continuous productivity programme will deliver at least €500 million of gross savings in 2024, ahead of HEINEKEN's medium term commitment of €400 million for the near-term, enabling investments behind HEINEKEN's growth agenda, its digital transformation, strategic capabilities and HEINEKEN's Brew a Better World activities.
Overall, HEINEKEN expects to grow operating profit (beia) organically in the range of a low- to high-single-digit. The wide range corresponds to the volatility in geo-political and economic conditions HEINEKEN has also witnessed in the past months and the fact that HEINEKEN will continue to invest behind EverGreen for long-term sustained value creation.
HEINEKEN also expects:
- An average effective interest rate (beia) of around 3.5% (2023: 3.4%)
- Other net finance expenses to further increase, mainly due to the impact from significant devaluations and the scarcity of hard currency in some key emerging markets, like HEINEKEN is experiencing currently in Nigeria
- An increase in HEINEKEN's effective tax rate (beia) to around 29%, mainly driven by changes in tax laws in Brazil (2023: 26.8%).
The factors above result in a net profit (beia) organic growth that is lower than the operating profit (beia) organic growth.
Finally, HEINEKEN expects investments in capital expenditure related to property, plant and equipment and intangible assets to be below 9% of net revenue (beia) (2023: 8.8%)
Total Dividend For 2023
The Heineken N.V. dividend policy is to pay a ratio of 30% to 40% of full year net profit (beia). For 2023, a total cash dividend of €1.73 per share, a similar amount to last year (2022: €1.73), representing a payout ratio of 36.8%, within the range of Heineken N.V.'s policy, will be proposed to the Heineken N.V. Annual General Meeting on 25 April 2024. If approved, a final dividend of €1.04 per share will be paid on 7 May 2024, as an interim dividend of €0.69 per share was paid on 10 August 2023.
If Heineken N.V. shareholders approve the proposed dividend, Heineken Holding N.V. will, according to its Articles of Association, pay an identical dividend per share. A final dividend of €1.04 per share of €1.60 nominal value will be payable as of 7 May 2024.
Both the Heineken Holding N.V. shares and the Heineken N.V. shares will trade ex-dividend on 29 April 2024. The dividend payment will be subject to a 15% Dutch withholding tax.
Translational Calculated Currency Impact
The translational currency impact for 2023 was negative on net revenue (beia) by €864 million and on operating profit (beia) by €102 million and positive on net profit beia by €6 million.
Applying spot rates as of 12 February 2024 to the 2023 financial results as a base, the calculated currency translational impact would be negative, approximately €440 million in net revenue (beia), €60 million at operating profit (beia), and positive by €40 million at net profit (beia).
Board of Directors Composition
Mr J.F.M.L. van Boxmeer will have completed his four-year appointment term upon conclusion of the Heineken Holding N.V. Annual General Meeting on 25 April 2024 ('2024 AGM'). Mr J.F.M.L. van Boxmeer is eligible for reappointment. A non-binding recommendation, drawn up by the Board of Directors, will be submitted to the 2024 AGM to reappoint Mr J.F.M.L. van Boxmeer as non-executive director of the Board of Directors, for the maximum period of four years (i.e. until the end of the Annual General Meeting of Shareholders to be held in 2028).
MEDIA RELEASE
Enquiries
Media Heineken Holding N.V.
Kees Jongsma tel. +31 6 54 79 82 53 E-mail: [email protected]
Joris Evers José Federico Castillo Martinez Director of Global Communication Investor Relations Director Michael Fuchs Mark Matthews / Chris Steyn Corporate & Financial Communications Manager Investor Relations Manager / Senior Analyst E-mail: [email protected] E-mail: [email protected] Tel: +31-20-5239355 Tel: +31-20-5239590
Media Investors
Investor Calendar Heineken N.V.
(events also accessible for Heineken Holding N.V. shareholders) Combined financial and sustainability annual report publication 22 February 2024 Trading Update for Q1 2024 24 April 2024 Annual General Meeting of Shareholders 25 April 2024 Quotation ex-final dividend 2023 29 April 2024 Final dividend 2023 payable 7 May 2024 Half Year 2024 Results 29 July 2024 Quotation ex-interim dividend 2024 31 July 2024 Interim dividend payable 8 August 2024 Trading Update for Q3 2024 23 October 2024
Conference Call Details
HEINEKEN will host an analyst and investor video webcast about its 2023 FY results today, 14 February, at 14:00 CET/ 13:00 GMT/ 08.00 EST. This call will also be accessible for Heineken Holding N.V. shareholders. The live video webcast will be accessible via the Heineken N.V.'s website: https://www.theheinekencompany.com/investors/results-reportswebcasts-and-presentations.
An audio replay service will also be made available after the webcast at the above web address. Analysts and investors can dial-in using the following telephone numbers:
United Kingdom (local): +44 20 3936 2999
Netherlands (local): +31 85 888 7233
United States: +1 646 787 9445
All other locations: +44 20 3936 2999
For the full list of dial in numbers, please refer to the following link: Global Dial-In Numbers
Participation password for all countries: 022498
Editorial information:
Heineken Holding N.V. engages in no activities other than its participating interest in Heineken N.V. and the management or supervision of and provision of services to that company. HEINEKEN is the world's most international brewer. It is the leading developer and marketer of premium and non-alcoholic beer and cider brands. Led by the Heineken® brand, the Group has a portfolio of more than 350 international, regional, local and
MEDIA RELEASE
specialty beers and ciders. With HEINEKEN's over 90,000 employees, we brew the joy of true togetherness to inspire a better world. HEINEKEN's dream is to shape the future of beer and beyond to win the hearts of consumers. HEINEKEN is committed to innovation, long-term brand investment, disciplined sales execution and focused cost management. Through "Brew a Better World", sustainability is embedded in the business. HEINEKEN has a well-balanced geographic footprint with leadership positions in both developed and developing markets. HEINEKEN operates breweries, malteries, cider plants and other production facilities in more than 70 countries. The most recent information is available on www.heinekenholding.com and www.theheinekencompany.com and follow HEINEKEN on LinkedIn, Twitter and Instagram.
Market Abuse Regulation:
This press release may contain price-sensitive information within the meaning of Article 7(1) of the EU Market Abuse Regulation.
Disclaimer:
This press release contains forward-looking statements based on current expectations and assumptions with regards to the financial position and results of HEINEKEN's activities, anticipated developments and other factors. All statements other than statements of historical facts are, or may be deemed to be, forward-looking statements. Forward-looking statements also include, but are not limited to, statements and information in HEINEKEN's non-financial reporting, such as HEINEKEN's emissions reduction and other climate change related matters (including actions, potential impacts and risks associated therewith). These forward-looking statements are identified by their use of terms and phrases such as "aim", "ambition", "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "milestones", "objectives", "outlook", "plan", "probably", "project", "risks", "schedule", "seek", "should", "target", "will" and similar terms and phrases. These forward-looking statements, while based on management's current expectations and assumptions, are not guarantees of future performance since they are subject to numerous assumptions, known and unknown risks and uncertainties, which may change over time, that could cause actual results to differ materially from those expressed or implied in the forwardlooking statements. Many of these risks and uncertainties relate to factors that are beyond HEINEKEN's ability to control or estimate precisely, such as but not limited to future market and economic conditions, the behaviour of other market participants, changes in consumer preferences, the ability to successfully integrate acquired businesses and achieve anticipated synergies, costs of raw materials and other goods and services, interest-rate and exchange-rate fluctuations, changes in tax rates, changes in law, environmental and physical risks, change in pension costs, the actions of government regulators and weather conditions. These and other risk factors are detailed in HEINEKEN's publicly filed annual reports. You are cautioned not to place undue reliance on these forward-looking statements, which speak only of the date of this press release. HEINEKEN assumes no duty to and does not undertake any obligation to update these forward-looking statements contained in this press release. Market share estimates contained in this press release are based on outside sources, such as specialised research institutes, in combination with management estimates.
Report of the Board of Directors
Heineken Holding N.V. has a 50.005% interest in the issued share capital (being 50.94% (2022: 50.064%) of the outstanding share capital) of Heineken N.V. Standing at the head of HEINEKEN, Heineken Holding N.V. is not an ordinary holding company. Since its formation in 1952, Heineken Holding N.V.'s object pursuant to its Articles of Association has been to manage or supervise the management of HEINEKEN and to provide services for Heineken N.V. Within HEINEKEN, the primary duties of Heineken N.V.'s Executive Board are to initiate and implement corporate strategy and to manage Heineken N.V. and its related enterprise. It is supervised in the performance of its duties by Heineken N.V.'s Supervisory Board. Because Heineken N.V. manages the HEINEKEN group companies, Heineken Holding N.V., unlike Heineken N.V., does not have an internal risk management and control system. Heineken Holding N.V. does not engage in any operational activities and employs no staff.
Further information regarding the developments during the financial year 2023 of Heineken N.V. and its related companies, and the material risks Heineken N.V. is facing is given in Heineken N.V.'s press release.
Board of Directors
Mr M. Das, non-executive director (chairman) Mrs C.L. de Carvalho-Heineken, executive director Mr M.R. de Carvalho, executive director Mrs C.M. Kwist, non-executive director Mr A.A.C. de Carvalho, non-executive director Mrs A.M. Fentener van Vlissingen, non-executive director Mrs L.L.H. Brassey, non-executive director Mr J.F.M.L. van Boxmeer, non-executive director
CONSOLIDATED FINANCIAL STATEMENTS FOR THE FULL YEAR 2023
| Contents | Page |
|---|---|
| Consolidated income statement | 8 |
| Consolidated statement of other comprehensive income | 8 |
| Consolidated statement of financial position | 9 |
| Consolidated statement of cash flows | 10 |
| Consolidated statement of changes in equity | 11 |
| Non-GAAP measures | 13 |
| Glossary | 17 |
The 2023 financial information included in the primary statements attached to this press release is derived from the Annual Report 2023. This Annual Report has been authorised for issue. The Annual Report has not yet been published by law and still has to be adopted by the Annual General Meeting of Shareholders on 25 April 2024.
In accordance with section 393, Title 9, Book 2 of the Netherlands Civil Code, Deloitte Accountants B.V. has issued an unqualified Independent auditors' report on the Financial Statements.
The full Annual Report will be available for download on the website (www.heinekenholding.com) as of 22 February 2024.
Consolidated Income Statement
For the year ended 31 December
| In millions of € | 2023 | 2022 |
|---|---|---|
| Revenue | 36,375 | 34,676 |
| Excise tax expense | (6,013) | (5,957) |
| Net revenue | 30,362 | 28,719 |
| Other income | 393 | 147 |
| Raw materials, consumables and services | (20,077) | (18,618) |
| Personnel expenses | (4,353) | (4,079) |
| Amortisation, depreciation and impairments | (3,096) | (1,886) |
| Total other expenses | (27,526) | (24,583) |
| Operating profit | 3,229 | 4,283 |
| Interest income | 90 | 74 |
| Interest expenses | (640) | (458) |
| Other net finance income/(expenses) | (375) | 48 |
| Net finance expenses | (925) | (336) |
| Share of profit of associates and joint ventures | 218 | 223 |
| Profit before income tax | 2,522 | 4,170 |
| Income tax expense | (121) | (1,131) |
| Profit | 2,401 | 3,039 |
| Attributable to: | ||
| Shareholders of Heineken Holding N.V. (net profit) | 1,174 | 1,343 |
| Non-controlling interests in Heineken N.V. | 1,130 | 1,339 |
| Non-controlling interests in Heineken N.V. group | ||
| companies | 97 | 357 |
| Profit | 2,401 | 3,039 |
| Weighted average number of shares – basic | 283,965,488 | 288,030,168 |
| Weighted average number of shares – diluted | 283,965,488 | 288,030,168 |
| Basic earnings per share (€) | 4.12 | 4.66 |
| Diluted earnings per share (€) | 4.12 | 4.66 |
Consolidated Statement of Other Comprehensive Income
For the year ended 31 December
| In millions of € | 2023 | 2022 |
|---|---|---|
| Profit | 2,401 | 3,039 |
| Other comprehensive income, net of tax: | ||
| Items that will not be reclassified to profit or loss: | ||
| Remeasurement of post-retirement obligations | (66) | 63 |
| Net change in fair value through OCI investments | (5) | 15 |
| Items that may be subsequently reclassified to profit or loss: |
||
| Currency translation differences | (170) | 437 |
| Change in fair value of net investment hedges | (28) | (62) |
| Change in fair value of cash flow hedges | (135) | (142) |
| Cash flow hedges reclassified to profit or loss | 12 | 38 |
| Net change in fair value through OCI investments - debt investments |
1 | — |
| Cost of hedging | 2 | (1) |
| Share of other comprehensive income of associates/joint ventures |
(75) | (46) |
| Other comprehensive income, net of tax | (464) | 302 |
| Total comprehensive income | 1,937 | 3,341 |
| Attributable to: | ||
| Shareholders of Heineken Holding N.V. | 1,032 | 1,521 |
| Non-controlling interests in Heineken N.V. | 995 | 1,518 |
| Non-controlling interests in Heineken N.V. group companies |
(90) | 302 |
| Total comprehensive income | 1,937 | 3,341 |
Consolidated Statement of Financial Position
As at 31 December As at 31 December
| In millions of € | 2023 | 2022 | In millions of € | 2023 | 2022 |
|---|---|---|---|---|---|
| Intangible assets | 21,781 | 21,408 | Heineken Holding N.V. shareholders' equity | 9,733 | 9,694 |
| Property, plant and equipment | 14,772 | 13,623 | Non-controlling interests in Heineken N.V. | 9,928 | 9,857 |
| Investments in associates and joint ventures | 4,130 | 4,296 | Non-controlling interests in Heineken N.V. group companies |
2,733 | 2,369 |
| Loans and advances to customers | 239 | 216 | Total equity | 22,394 | 21,920 |
| Deferred tax assets | 1,292 | 618 | |||
| Equity instruments | 167 | 145 | Borrowings | 14,046 | 12,893 |
| Other non-current assets | 978 | 1,085 | Post-retirement obligations | 586 | 568 |
| Total non-current assets | 43,359 | 41,391 | Provisions | 627 | 572 |
| Deferred tax liabilities | 2,213 | 2,138 | |||
| Inventories | 3,721 | 3,250 | Other non-current liabilities | 67 | 125 |
| Trade and other receivables | 5,019 | 4,531 | Total non-current liabilities | 17,539 | 16,296 |
| Current tax assets | 196 | 84 | |||
| Derivative assets | 58 | 70 | Borrowings | 4,192 | 3,484 |
| Cash and cash equivalents | 2,377 | 2,765 | Trade and other payables | 9,432 | 9,283 |
| Assets classified as held for sale | 28 | 315 | Returnable packaging deposits | 531 | 545 |
| Total current assets | 11,399 | 11,015 | Provisions | 206 | 226 |
| 2023 | 2022 | In millions of € | 2023 | 2022 |
|---|---|---|---|---|
| 21,781 | 21,408 | Heineken Holding N.V. shareholders' equity | 9,733 | 9,694 |
| 14,772 | 13,623 | Non-controlling interests in Heineken N.V. | 9,928 | 9,857 |
| 4,130 | 4,296 | Non-controlling interests in Heineken N.V. group companies |
2,733 | 2,369 |
| 239 | 216 | Total equity | 22,394 | 21,920 |
| 1,292 | 618 | |||
| 167 | 145 | Borrowings | 14,046 | 12,893 |
| 978 | 1,085 | Post-retirement obligations | 586 | 568 |
| 43,359 | 41,391 | Provisions | 627 | 572 |
| Deferred tax liabilities | 2,213 | 2,138 | ||
| 3,721 | 3,250 | Other non-current liabilities | 67 | 125 |
| 5,019 | 4,531 | Total non-current liabilities | 17,539 | 16,296 |
| 196 | 84 | |||
| 58 | 70 | Borrowings | 4,192 | 3,484 |
| 2,377 | 2,765 | Trade and other payables | 9,432 | 9,283 |
| 28 | 315 | Returnable packaging deposits | 531 | 545 |
| 11,399 | 11,015 | Provisions | 206 | 226 |
| Current tax liabilities | 332 | 352 | ||
| Derivative liabilities | 132 | 119 | ||
| Liabilities associated with assets classified as held for sale |
— | 181 | ||
| Total current liabilities | 14,825 | 14,190 | ||
| 54,758 | 52,406 | Total equity and liabilities | 54,758 | 52,406 |
| Total assets | 54,758 |
|---|---|
Consolidated Statement of Cash Flows
For the year ended 31 December
| In millions of € | 2023 | 2022 |
|---|---|---|
| Operating activities | ||
| Profit | 2,401 | 3,039 |
| Adjustments for: | ||
| Amortisation, depreciation and impairments | 3,096 | 1,886 |
| Net interest expenses | 550 | 384 |
| Other income | (352) | (147) |
| Share of profit of associates and joint ventures and | ||
| dividend income on fair value through OCI investments | (226) | (230) |
| Income tax expenses | 121 | 1,131 |
| Other non-cash items | 537 | 284 |
| Cash flow from operations before changes in working | ||
| capital and provisions | 6,127 | 6,347 |
| Change in inventories | (4) | (793) |
| Change in trade and other receivables | (42) | (668) |
| Change in trade and other payables and returnable | ||
| packaging deposits | (100) | 981 |
| Total change in working capital | (146) | (480) |
| Change in provisions and post-retirement obligations | (32) | (207) |
| Cash flow from operations | 5,949 | 5,660 |
| Interest paid | (624) | (439) |
| Interest received | 118 | 46 |
| Dividends received | 147 | 177 |
| Income taxes paid | (1,160) | (948) |
| Cash flow related to interest, dividend and income tax | (1,519) | (1,164) |
| Cash flow from operating activities | 4,430 | 4,496 |
| In millions of € | 2023 | 2022 |
|---|---|---|
| Investing activities | ||
| Proceeds from sale of property, plant and equipment and | ||
| intangible assets | 154 | 112 |
| Purchase of property, plant and equipment | (2,434) | (1,791) |
| Purchase of intangible assets | (243) | (220) |
| Loans issued to customers and other investments | (244) | (219) |
| Repayment on loans to customers and other investments | 96 | 31 |
| Cash flow used in operational investing activities | (2,671) | (2,087) |
| Free operating cash flow | 1,759 | 2,409 |
| Acquisition of subsidiaries, net of cash acquired | (806) | (171) |
| Acquisition of/additions to associates, joint ventures and | ||
| other investments | (409) | (45) |
| Disposal of subsidiaries, net of cash disposed of | 257 | 9 |
| Disposal of associates, joint ventures and other | ||
| investments | 53 | 8 |
| Cash flow used in acquisitions and disposals | (905) | (199) |
| Cash flow used in investing activities | (3,576) | (2,286) |
| Financing activities | ||
| Proceeds from borrowings | 6,751 | 644 |
| Repayment of borrowings | (4,614) | (1,934) |
| Payment of lease commitments | (390) | (304) |
| Dividends paid | (1,335) | (1,099) |
| Purchase own shares and shares issued | (942) | (43) |
| Acquisition of non-controlling interests | (286) | (391) |
| Cash flow used in financing activities | (816) | (3,127) |
| Net cash flow | 38 | (917) |
| Cash and cash equivalents as at 1 January | 1,618 | 2,556 |
| Effect of movements in exchange rates | (231) | (21) |
| Cash and cash equivalents as at 31 December | 1,425 | 1,618 |
Consolidated Statement of Changes in Equity
| In millions of € | Share capital |
Share premium |
Translation reserve |
Hedging reserve |
Cost of hedging reserve |
Fair value reserve |
Other legal reserves |
Retained earnings |
Shareholders of Heineken Holding N.V. |
Non controlling interests in Heineken N.V. |
Non controlling interests in Heineken N.V. group companies |
Total equity |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2022 | 461 | 1,257 | (2,014) | 30 | (4) | 29 | 566 | 8,268 | 8,593 | 8,763 | 2,344 | 19,700 |
| Hyperinflation restatement to 1 January 2022 | — | — | — | — | — | — | — | 123 | 123 | 122 | — | 245 |
| Balance as at 1 January 2022 after restatement |
461 | 1,257 | (2,014) | 30 | (4) | 29 | 566 | 8,391 | 8,716 | 8,885 | 2,344 | 19,945 |
| Profit | — | — | — | — | — | — | 104 | 1,239 | 1,343 | 1,339 | 357 | 3,039 |
| Other comprehensive income/(loss) | — | — | 192 | (52) | (1) | 7 | — | 32 | 178 | 179 | (55) | 302 |
| Total comprehensive income/(loss) | — | — | 192 | (52) | (1) | 7 | 104 | 1,271 | 1,521 | 1,518 | 302 | 3,341 |
| Realised hedge results from non-financial assets | — | — | — | — | — | — | — | — | — | — | — | — |
| Transfer to/from retained earnings | — | — | — | — | — | — | (47) | 47 | — | — | — | — |
| Dividends to shareholders | — | — | — | — | — | — | — | (421) | (421) | (419) | (263) | (1,103) |
| Purchase own shares or contributions received from Heineken N.V. NCI shareholders by Heineken N.V. |
— | — | — | — | — | — | — | (22) | (22) | (21) | — | (43) |
| Dilution | — | — | — | — | — | — | — | 2 | 2 | (2) | — | — |
| Share-based payments by Heineken N.V. | — | — | — | — | — | — | — | 25 | 25 | 24 | — | 49 |
| Acquisition/disposal of non-controlling interests in Heineken N.V. group companies by Heineken N.V. |
— | — | — | — | — | — | — | (187) | (187) | (186) | (18) | (391) |
| Hyperinflation impact | — | — | — | — | — | — | — | 58 | 58 | 58 | — | 116 |
| Changes in consolidation by Heineken N.V. | — | — | — | — | — | — | — | 2 | 2 | — | 4 | 6 |
| Balance as at 31 December 2022 | 461 | 1,257 | (1,822) | (22) | (5) | 36 | 623 | 9,166 | 9,694 | 9,857 | 2,369 | 21,920 |
Consolidated Statement of Changes in Equity (continued)
| In millions of € | Share capital |
Share premium |
Translation reserve |
Hedging reserve |
Cost of hedging reserve |
Fair value reserve |
Other legal reserves |
Reserve for own shares |
Retained earnings |
Shareholders of Heineken Holding N.V. |
Non controlling interests in Heineken N.V. |
Non controlling interests in Heineken N.V. group companies |
Total equity |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2023 | 461 | 1,257 | (1,822) | (22) | (5) | 36 | 623 | — | 9,166 | 9,694 | 9,857 | 2,369 | 21,920 |
| Hyperinflation restatement to 1 January 2023 | — | — | — | — | — | — | — | — | 20 | 20 | 20 | — | 40 |
| Balance as at 1 January 2023 after restatement |
461 | 1,257 | (1,822) | (22) | (5) | 36 | 623 | — | 9,186 | 9,714 | 9,877 | 2,369 | 21,960 |
| Profit | — | — | — | — | — | — | 104 | — | 1,070 | 1,174 | 1,130 | 97 | 2,401 |
| Other comprehensive income/(loss) | — | — | (44) | (63) | 1 | (2) | — | — | (34) | (142) | (135) | (187) | (464) |
| Total comprehensive income/(loss) | — | — | (44) | (63) | 1 | (2) | 104 | — | 1,036 | 1,032 | 995 | (90) | 1,937 |
| Realised hedge results from non-financial assets | — | — | — | 79 | — | — | — | — | — | 79 | 77 | — | 156 |
| Transfer to/from retained earnings | — | — | — | — | — | — | 272 | — | (272) | — | — | — | — |
| Dividends to shareholders | — | — | — | — | — | — | — | — | (545) | (545) | (535) | (270) | (1,350) |
| Purchase own shares or contributions received from Heineken N.V. NCI shareholders by Heineken N.V. |
— | — | — | — | — | — | — | — | (480) | (480) | (463) | 1 | (942) |
| Purchase own shares | — | — | — | — | — | — | — | (390) | — | (390) | — | — | (390) |
| Dilution | — | — | — | — | — | — | — | — | 170 | 170 | (170) | — | — |
| Share-based payments by Heineken N.V. | — | — | — | — | — | — | — | — | 1 | 1 | 1 | — | 2 |
| Acquisition/disposal of non-controlling interests in Heineken N.V. group companies by Heineken N.V. |
— | — | — | — | — | — | — | — | (109) | (109) | (105) | (9) | (223) |
| Hyperinflation impact | — | — | — | — | — | — | — | — | 83 | 83 | 80 | — | 163 |
| Changes in consolidation by Heineken N.V. | — | — | — | — | — | — | — | — | 178 | 178 | 171 | 732 | 1,081 |
| Balance as at 31 December 2023 | 461 | 1,257 | (1,866) | (6) | (4) | 34 | 999 | (390) | 9,248 | 9,733 | 9,928 | 2,733 | 22,394 |
Non-Gaap Measures
In the internal management reports, HEINEKEN consistently measures its segmental performance primarily based on operating profit and operating profit beia (before exceptional items and amortisation of acquisition-related intangible assets). Wherever appropriate and practical, HEINEKEN provides reconciliations for relevant GAAP measures. The non-GAAP measures are unaudited.
| In millions of € | 2023 | 2022 |
|---|---|---|
| Operating profit (beia) | 4,443 | 4,502 |
| Amortisation of acquisition-related intangible assets and exceptional items recorded in operating profit |
(1,214) | (219) |
| Share of profit of associates and joint ventures | 218 | 223 |
| Net finance expenses | (925) | (336) |
| Profit before income tax (IFRS) | 2,522 | 4,170 |
| Profit attributable to shareholders of the Company (net profit) (IFRS) |
1,174 | 1,343 |
| Non-controlling interests in Heineken N.V. | 1,130 | 1,339 |
| 2,304 | 2,682 | |
| Amortisation of acquisition-related intangible assets recorded in operating profit |
385 | 333 |
| Exceptional items recorded in operating profit | 829 | (114) |
| Exceptional items recorded in net finance expenses/ (income) |
30 | (106) |
| Exceptional items and amortisation of acquisition-related intangible assets recorded in share of profit of associates and joint ventures |
52 | 40 |
| Exceptional items recorded in income tax expense | (831) | 8 |
| Allocation of exceptional items and amortisation of acquisition-related intangibles to non-controlling interests in Heineken N.V. group companies |
(136) | (6) |
| Net profit (beia) | 2,632 | 2,836 |
Due to rounding, this table will not always cast.
The 2023 exceptional items and amortisation of acquisition-related intangibles on net profit and loss amount to €329 million net expense (2022: €155 million net expense). This amount consists of:
- €385 million (2022: €333 million) of amortisation of acquisition-related intangibles and inventory recorded in operating profit, of which € 317 million in amortisation, depreciation and impairments (2022: €333 million) and €68 million in raw material consumables and services (2022: nil).
- €829 million net exceptional expense (2022: €114 million net benefit) recorded in operating profit. This includes:
- a net impairment of €683 million recorded in amortisation, depreciation and impairments, including impairment of €491 million for Heineken Beverages (total net impairment reversal in 2022: €132 million).
- €209 million exceptional expense related to the recycling of foreign currency translation reserve upon selling the Russia disposal group recorded in amortisation, depreciation and impairments and €195 million of exceptional gain on sale of Vrumona B.V. (Vrumona) recorded in other income.
- net restructuring expenses recorded in personnel expenses of €130 million (2022: €70 million).
- €40 million exceptional benefit recorded in other income related to tax credits in Brazil (2022: €44 million net benefit as reduction recorded in marketing expense related to tax credits in Brazil).
- €50 million net exceptional expense relating to hyperinflation accounting adjustments (2022: €44 million), of which €55 million income recorded in revenue (2022: €25 million), €69 million expense in raw materials consumables and services (2022: €54 million), €32 million expense in amortisation, depreciation and impairments (2022: €13 million) and €4 million in personnel expenses (2022: €2 million)
- €8 million of other exceptional net benefits (2022: €52 million of other exceptional net benefits).
- €30 million of exceptional net finance expenses, mainly related to €125 million of exceptional net expense related to the one-off impact of the devaluation of the Nigerian Naira, €76 million of exceptional net benefit related to the net monetary gain resulting from hyperinflation, €30 million of exceptional net benefit mainly related to interest on tax credits in Brazil and €11 million other exceptional net finance expenses (2022: €106 million,
exceptional net finance benefit, mainly related to the net monetary gain resulting from hyperinflation of €94 million).
- €52 million of exceptional net expense (2022: €40 million net expense) included in the share of profit of associates and joint ventures, mainly relating to the amortisation of acquisition-related intangible assets.
- €831 million of exceptional net benefit in income tax expense, mainly related to the recognition of previously unrecognised deferred tax assets in Brazil of €661 million (2022: €8 million of exceptional net expense in income tax expense.
- Total amount of eia allocated to non-controlling interests in Heineken N.V. group companies amounts to €136 million net benefit (2022: €6 million, net benefit).
Net debt
| (in € million unless otherwise stated) | FY23 | FY22 |
|---|---|---|
| Non-current borrowings | 14,046 | 12,893 |
| Current borrowings | 4,192 | 3,484 |
| Total borrowings | 18,238 | 16,377 |
| Market value of cross-currency interest rate swaps | (3) | (17) |
| Other investments | (23) | (64) |
| Cash and cash equivalents | (2,377) | (2,765) |
| Net debt | 15,835 | 13,531 |
| Capital expenditure related to PP&E and intangible assets (capex) | ||
| (in € million unless otherwise stated) | FY23 | FY22 |
| Purchase of property, plant and equipment | 2,434 | 1,791 |
| Purchase of intangible assets | 243 | 220 |
| Capital expenditure related to PP&E and intangible assets (capex) |
2,677 | 2,011 |
MEDIA RELEASE
Key figures1
| 2022 | 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in € million unless otherwise stated) | Reported | Eia | Beia | Reported | Eia | Beia | Currency translation |
Consolidation impact |
Organic growth |
Organic growth |
| Revenue | 34,676 | -33 | 34,643 | 36,375 | -65 | 36,310 | -1,168 | 1,253 | 1,582 | 4.6 % |
| Excise tax expense | -5,957 | 8 | -5,949 | -6,013 | 12 | -6,001 | 305 | -366 | 9 | 0.1 % |
| Net revenue | 28,719 | -25 | 28,694 | 30,362 | -54 | 30,308 | -864 | 887 | 1,591 | 5.5 % |
| Marketing and selling expenses | -2,692 | -43 | -2,735 | -2,767 | 1 | -2,766 | 76 | -52 | -54 | -2.0 % |
| Personnel expenses | -4,079 | 74 | -4,005 | -4,353 | 139 | -4,214 | 69 | -150 | -128 | -3.2 % |
| Amortisation, depreciation and impairments | -1,886 | 207 | -1,679 | -3,096 | 1,268 | -1,828 | 41 | -64 | -126 | -7.5 % |
| Other net (expenses)/income | -15,779 | 6 | -15,773 | -16,917 | -141 | -17,058 | 576 | -656 | -1,204 | -7.6 % |
| Total net other (expenses)/income | -24,436 | 244 | -24,192 | -27,133 | 1,268 | -25,865 | 762 | -922 | -1,513 | -6.3 % |
| Operating profit | 4,283 | 219 | 4,502 | 3,229 | 1,214 | 4,443 | -102 | -35 | 78 | 1.7 % |
| Interest income | 74 | -1 | 73 | 90 | 0 | 90 | -6 | 0 | 23 | 31.8 % |
| Interest expense | -458 | 6 | -452 | -640 | -4 | -644 | 57 | -55 | -193 | -42.7 % |
| Net interest income/(expenses) | -384 | 5 | -380 | -550 | -4 | -554 | 51 | -55 | -170 | -44.8 % |
| Other net finance income/(expenses) | 48 | -111 | -63 | -375 | 34 | -343 | 68 | -12 | -336 | -537.3 % |
| Share of profit of associates and joint ventures | 223 | 40 | 263 | 218 | 52 | 270 | -7 | 3 | 11 | 4.3 % |
| Income tax expense | -1,131 | 8 | -1,124 | -121 | -831 | -952 | -2 | 26 | 148 | 13.2 % |
| Non-controlling interests | -357 | -6 | -363 | -97 | -136 | -233 | -2 | -14 | 146 | 40.2 % |
| Net profit | 2,682 | 155 | 2,836 | 2,304 | 329 | 2,632 | 6 | -87 | -123 | -4.3 % |
| EBITDA2 | 6,392 | 52 | 6,444 | 6,543 | -2 | 6,541 |
1 This table will not always cast due to rounding.
2 EBITDA is derived from 'operating profit' less 'amortisation, depreciation and impairments' plus 'share of profit of associates and joint ventures'.
Key figures1
| 2021 | 2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in € million unless otherwise stated) | Reported | Eia | Beia | Reported | Eia | Beia | Currency translation |
Consolidation impact |
Organic growth |
Organic growth |
| Revenue | 26,583 | 0 | 26,583 | 34,676 | -33 | 34,643 | 1,740 | 1,247 | 5,072 | 19.1 % |
| Excise tax expense | -4,642 | -41 | -4,683 | -5,957 | 8 | -5,949 | -159 | -677 | -431 | -9.2 % |
| Net revenue | 21,941 | -40 | 21,901 | 28,719 | -25 | 28,694 | 1,582 | 570 | 4,642 | 21.2 % |
| Marketing and selling expenses | -2,091 | 0 | -2,091 | -2,692 | -43 | -2,735 | -150 | -27 | -467 | -22.4 % |
| Personnel expenses | -3,485 | -4 | -3,489 | -4,079 | 74 | -4,005 | -160 | -40 | -316 | -9.1 % |
| Amortisation, depreciation and impairments | -1,959 | 420 | -1,539 | -1,886 | 207 | -1,679 | -81 | -35 | -24 | -1.6 % |
| Other net (expenses)/income | -9,923 | -1,445 | -11,368 | -15,779 | 6 | -15,773 | -933 | -456 | -3,016 | -26.5 % |
| Total net other (expenses)/income | -17,458 | -1,029 | -18,487 | -24,436 | 244 | -24,192 | -1,324 | -558 | -3,824 | -20.7 % |
| Operating profit | 4,483 | -1,069 | 3,414 | 4,283 | 219 | 4,502 | 258 | 12 | 818 | 24.0 % |
| Interest income | 49 | -1 | 48 | 74 | -1 | 73 | 6 | 0 | 18 | 37.2 % |
| Interest expense | -462 | 11 | -451 | -458 | 6 | -452 | -13 | 2 | 9 | 2.1 % |
| Net interest income/(expenses) | -413 | 10 | -403 | -384 | 5 | -380 | -7 | 2 | 27 | 6.8 % |
| Other net finance income/(expenses) | 14 | -108 | -94 | 48 | -111 | -63 | 4 | 16 | 12 | 12.3 % |
| Share of profit of associates and joint ventures | 250 | -12 | 238 | 223 | 40 | 263 | 29 | -32 | 29 | 12.1 % |
| Income tax expense | -799 | -73 | -872 | -1,131 | 8 | -1,124 | -61 | -11 | -180 | -20.7 % |
| Non-controlling interests | -211 | -30 | -241 | -357 | -6 | -363 | -26 | -17 | -79 | -32.5 % |
| Net profit | 3,324 | -1,283 | 2,041 | 2,682 | 155 | 2,836 | 198 | -30 | 627 | 30.7 % |
| EBITDA2 | 6,692 | -1,501 | 5,191 | 6,392 | 52 | 6,444 |
1 This table will not always cast due to rounding
2 EBITDA is derived from 'operating profit' less 'amortisation, depreciation and, impairments' plus 'share of profit of associates and joint ventures'
GLOSSARY
Acquisition-related intangible assets
Acquisition-related intangible assets are assets that HEINEKEN only recognises as part of a purchase price allocation following an acquisition. This includes, among others, brands, customer-related and certain contract-based intangibles.
Average effective interest rate
Net interest income and expenses related to the net debt position divided by the average net debt position calculated on a quarterly basis.
Beia
Before exceptional items and amortisation of acquisition-related intangible assets. Whenever used in this report, the term "beia" refers to performance measures (EBITDA, net profit, effective tax rate, etc) before exceptional items and amortisation of acquisition related intangible assets.
Beyond Beer
Alcoholic and non-alcoholic beverage propositions beyond core beer, which leverage natural ingredients and/or beer production process. This includes for example flavoured beer, Ciders, RTDs (Ready-To-Drinks) and malt based drinks.
Capital expenditure related to PP&E and intangible assets (capex)
Sum of 'Purchase of property, plant and equipment' and 'Purchase of intangible assets' as included in the consolidated statement of cash flows.
Cash conversion ratio
Free operating cash flow/net profit (beia) before deduction of non-controlling interests, calculated on an annual basis.
Cash flow (used in)/from operational investing activities
This represents the total of cash flow from sale and purchase of Property, plant and equipment and Intangible assets, proceeds and receipts of Loans to customers and Other investments.
Centrally available cash
Represents cash after the deduction of overdraft balances in the group cash pooling structure and other cash and cash equivalents owned at group level.
Centrally available financing headroom
This consists of the undrawn part of the committed €3.5 billion revolving credit facility and centrally available cash, minus centrally issued commercial paper and short-term bank borrowings at group level.
Consolidation changes
Changes as a result of acquisitions and disposals.
Depletions
Sales by distributors to the retail trade.
Dividend payout
Proposed dividend as percentage of net profit (beia).
Earnings per share (EPS)
Basic
Net profit/(loss) divided by the weighted average number of shares – basic – during the year.
Diluted
Net profit/(loss) divided by the weighted average number of shares – diluted – during the year.
EBITDA
Earnings before interest, taxes, net finance expenses, depreciation, amortisation and impairment. EBITDA includes HEINEKEN's share in net profit of joint ventures and associates.
Effective tax rate
Income tax expense expressed as a percentage of the profit before income tax, adjusted for share of profit of associates and joint ventures.
Eia
Exceptional items and amortisation of acquisition-related intangible assets.
Exceptional items
Items of income and expense of such size, nature or incidence, that in the view of management their disclosure is relevant to explain the performance of HEINEKEN for the period.
Free operating cash flow
Total of cash flow from operating activities and cash flow from operational investing activities.
Gross merchandise value
Value of all products sold via our eB2B platforms. This includes our own and thirdparty products, including all duties and taxes.
Gross savings
Structural cost reductions resulting from targeted initiatives to improve efficiency and productivity, relative to the baseline of expenses of a previous period adjusted for inflation. The gross savings exclude cost-to-achieve, consolidation changes and decisions to reinvest.
Group net revenue (beia)
Consolidated net revenue (beia) plus attributable share of net revenue (beia) from joint ventures and associates.
Group operating profit (beia)
Consolidated operating profit (beia) plus attributable share of operating profit (beia) from joint ventures and associates, excluding Heineken N.V. Head Office and eliminations.
HEINEKEN
Heineken Holding N.V., Heineken N.V., its subsidiaries and interests in joint ventures and associates
Net debt
Non-current and current interest-bearing borrowings (incl. lease liabilities), bank overdrafts and market value of cross-currency interest rate swaps less cash, cash equivalents and other investments.
Net profit
Profit after deduction of non-controlling interests (profit attributable to shareholders of Heineken Holding N.V.).
Net revenue
Revenue as defined in IFRS 15 (after discounts) minus the excise tax expense for those countries where the excise is borne by HEINEKEN.
Net revenue per hectolitre
Net revenue divided by total consolidated volume.
Organic growth
Growth excluding the effect of foreign currency translational effects, consolidation changes, exceptional items and amortisation of acquisition-related intangible assets.
Organic Growth %
Organic growth divided by the related prior year beia amount. Whenever used in this report, the term "organically" refers to the organic growth % of the related performance measures (revenue, operating profit, net profit, etc).
Organic volume growth
Growth in volume, excluding the effect of consolidation changes.
Price mix on a constant geographic basis
Refers to the different components that influence net revenue per hectolitre, namely the changes in the absolute price of each individual SKU and their weight in the portfolio. The weight of the countries in the total revenue in the base year is kept constant.
Profit
Total profit of HEINEKEN before deduction of non-controlling interests.
Pro-forma 12-month rolling net debt/EBITDA (beia) ratio
Net debt divided by the 12-month rolling pro-forma EBITDA (beia), which includes acquisitions and excludes disposals on a 12-month pro-forma basis.
®
All brand names mentioned in this report, including those brand names not marked by an ®, represent registered trademarks and are legally protected.
Region
A region is defined as HEINEKEN's managerial classification of countries into geographical units.
Total borrowings
Sum of 'Non-current borrowings' and 'current borrowings' as included in the consolidated statement of financial position.
Variable cost
Includes input costs (raw material, packaging material and inventory movements), transport and energy & water.
Volume
Beer volume
Beer volume produced and sold by consolidated companies.
Brand specific volume (Heineken® volume, Amstel® volume, etc.)
Brand volume produced and sold by consolidated companies plus 100% of brand volume sold under licence agreements by joint ventures, associates and third parties.
Group beer volume
The sum of beer volume, licensed beer volume and attributable share of beer volume from joint ventures and associates.
Licensed volume
100% of volume from HEINEKEN's beer brands sold under licence agreements by joint ventures, associates and third parties.
LONO
Low- and non-alcoholic beer, cider & brewed soft drinks with an ABV <=3.5%.
Non-beer volume
Cider, soft drinks and other non-beer volume produced and sold by consolidated companies.
Premium beer
Beer sold at a price index equal or greater than 115 relative to the average market price of beer.
Third-party products volume
Volume of third-party products (beer and non-beer) resold by consolidated companies.
Total consolidated volume
The sum of beer volume, non-beer volume and third-party products volume.
Weighted average number of shares
Basic
Weighted average number of outstanding shares.
Diluted
Weighted average number of shares outstanding, adjusted for the weighted average number of own shares purchased or held.