In an announcement on Wednesday, global brewer Heineken (HEIN.AS) cautioned investors that its 2024 profit could fall significantly below analyst estimates due to geopolitical and economic volatility. This revelation led to a drop in its shares by as much as 6.5%.
Analysts had previously anticipated a 9.9% organic operating profit growth for Heineken over the next year, attributing this growth to decreasing costs compared to the previous year. However, the company stated that actual growth could range anywhere from low to high single-digit percentages due to the uncertain global environment.
Chief Executive Dolf van den Brink expressed caution about the economic and geopolitical outlook, highlighting the company’s aim to boost revenue through a balance of volumes and prices. Heineken faced challenges in 2023 as beer brewers raised prices to offset increased costs, leading to a decline in volumes by 4.7% organically.
The decline in volumes was particularly notable in Vietnam and Nigeria, key markets for Heineken, where economic and political conditions impacted sales. This prompted the company to lower its 2023 forecast and focus on restoring volumes through brand investment.
While some analysts speculate that Heineken’s 2024 outlook could lead to cuts in earnings forecasts, others believe that caution is warranted given the current environment. Despite the challenges, Heineken remains committed to delivering at least €500 million in gross savings in 2024, exceeding its initial target.
Despite the profit warning, Heineken reported a 1.7% rise in organic operating profit for 2023, surpassing analyst expectations. However, the company incurred a €491 million impairment charge related to its southern Africa division, formed after its 2021 acquisition of South African drinks group Distell and Namibian Breweries.
Heineken’s shares experienced a slight recovery following the announcement but remained down by 5.5% by mid-morning.
