Heineken N.V. reports 2019 full year results
Amsterdam, 12 February 2020 – Heineken N.V. (EURONEXT: HEIA;
OTCQX: HEINY) announces:
- Net revenue (beia) organic growth +5.6%; net revenue (beia) per
hectolitre +3.3%
- Consolidated beer volume +3.1%
- Heineken® volume +8.3%, best performance in over a decade
- Operating profit (beia) organic growth +3.9%
- Operating profit (beia) margin 16.8% (-12 bps)
- Net profit (beia) €2,517 million, +4.3% organically
- Diluted EPS (beia) €4.38 (2018: €4.18).
CEO STATEMENT
Jean-François van Boxmeer, Chairman of the Executive Board /
CEO, commented:
"In 2019, we delivered another year of superior top-line growth,
with continued strong performance in the second half. Growth was
well balanced with beer volume up 3.1% and revenue per hectolitre
up 3.3%, driven by robust pricing and focus on premiumisation. The
Heineken® brand growth accelerated to 8.3%, with more than 40
countries delivering double digit growth. The successful roll-out
of Heineken® 0.0 continued and it is now available in 57
markets.
Our strategy continues to be growth oriented with an
ever-increasing emphasis on the sustainability of this growth, both
socially and environmentally. Over the past decade, we have lowered
our water usage by almost a third to 3.4 hectolitres of water per
hectolitre produced, ahead of our 2020 target. We increased the
proportion of renewable energy in production to 19%. In more than
60 markets, we spent over 10% of Heineken® media budgets on
responsible consumption awareness campaigns.
We closed the year with an operating profit (beia) organic
growth of 3.9%. In a context of increased input costs, we have
continued to work on the efficiency of our operations whilst
steadily investing behind our brands, our sustainability agenda and
our digital transformation.
Looking ahead to 2020, we expect our operating profit (beia) to
grow by mid-single digit on an organic basis, barring major
negative macro economic and political developments."
FINANCIAL SUMMARY1
IFRS Measures |
€
million |
Total
growth |
|
BEIA Measures |
€
million |
Organic growth2 |
Revenue |
28,521 |
|
6.4 |
% |
|
Revenue
(beia) |
28,443 |
|
5.2 |
% |
Net
revenue |
23,969 |
|
6.6 |
% |
|
Net revenue
(beia) |
23,894 |
|
5.6 |
% |
Operating
profit |
3,633 |
|
16.4 |
% |
|
Operating
profit (beia) |
4,020 |
|
3.9 |
% |
|
|
|
|
Operating
profit (beia) margin |
16.8 |
% |
|
Net
profit |
2,166 |
|
13.2 |
% |
|
Net profit
(beia) |
2,517 |
|
4.3 |
% |
Diluted EPS
(in €) |
3.77 |
|
12.5 |
% |
|
Diluted EPS
(beia) (in €) |
4.38 |
|
4.9 |
% |
|
|
Free operating
cash flow |
2,228 |
|
|
|
Net debt / EBITDA (beia)3 |
2.6x |
|
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 used throughout this report.
Last year figures restated for IAS 37. Please refer to page 24 for
more details. 2 Organic growth shown, except for Diluted EPS (beia)
which is total growth. The impact from IFRS 16 is reflected on all
metrics, but is excluded from the organic growth calculation. 3
Includes acquisitions and excludes disposals on a 12 month
pro-forma basis and includes the first time impact of IFRS
16.
FULL YEAR 2020 OUTLOOK STATEMENT
For 2020, we anticipate our business to deliver:
- A superior top-line growth driven by volume, price and
premiumisation
- A low-single digit increase of input costs per hectolitre, with
the benefit of lower prices in some commodities largely offset by
transactional currency headwinds
- Continued cost management initiatives and productivity
improvements to fuel investment behind our brands, innovation,
e-commerce platforms, technology upgrades and sustainability
programmes.
As a result, we currently expect operating profit (beia) to grow
by mid-single digit on an organic basis, barring major negative
macro economic or political developments. In particular it is
at this stage not possible to assess the extent and duration of the
impact of Coronavirus on the economy and on our business.
We also anticipate:
- An average interest rate (beia) broadly in line with 2019
(2019: 2.9%)
- An effective tax rate (beia) broadly in line with 2019 (2019:
27.6%)
- Capital expenditure related to property, plant and equipment of
around €2 billion (2019: €1.9 billion).
OPERATIONAL REVIEW
Top-line performance continued to be strong in second part of
2019, with a good balance between price mix and volume growth. Net
revenue per hectolitre (beia) grew in all regions on a constant
geographic basis, driven by pricing and premiumisation.
Net revenue (beia) grew 5.6%
organically, supported by a 3.3% increase in net revenue (beia) per
hectolitre and a 2.2% increase in total consolidated volumes. The
underlying price mix on a constant geographic basis was up 3.4%. In
the second half of the year net revenue (beia) increased 5.7%
(1H19: 5.6%), with total consolidated volume growth of 2.0% (1H19:
2.5%), net revenue (beia) per hectolitre up 3.6% (1H19: 3.0%) and
price mix on a constant geographic basis of 3.2% (1H19: 3.5%).
Consolidated beer volume grew 3.1% organically
for the full year. The fourth quarter closed the year strongly with
4.1% growth, benefiting from double-digit growth in Brazil, Vietnam
and Cambodia. Premium volumes increased high-single digit with
strong growth across all regions and continued positive momentum of
Heineken®.
Consolidated beer volume(in mhl) |
4Q19 |
4Q18 |
Organicgrowth |
FY19 |
FY18 |
Organicgrowth |
Heineken N.V. |
61.1 |
|
58.6 |
|
4.1 |
% |
241.4 |
|
233.8 |
|
3.1 |
% |
Africa Middle East & Eastern Europe |
11.5 |
|
11.2 |
|
2.7 |
% |
43.7 |
|
41.7 |
|
4.6 |
% |
Americas |
23.3 |
|
22.2 |
|
5.2 |
% |
85.6 |
|
83.3 |
|
2.6 |
% |
Asia Pacific |
8.4 |
|
7.8 |
|
12.4 |
% |
31.1 |
|
29.0 |
|
11.8 |
% |
Europe |
17.8 |
|
17.4 |
|
0.0 |
% |
81.0 |
|
79.8 |
|
-0.2 |
% |
Heineken® volume growth accelerated in the
fourth quarter to 12.0% to close the year with 8.3% growth, the
best in a decade. The brand grew across all regions with double
digit growth in over 40 markets including Brazil, Mexico, South
Africa, Nigeria, the UK, Romania and Germany. Brazil is now the
largest market for Heineken® globally and with the
addition of the UK and Nigeria, now 12 markets sell more than one
million hectolitres of the brand. The successful roll-out of
Heineken® 0.0 continues and it is now available in
57 markets.
Heineken® volume(in mhl) |
4Q19 |
Organicgrowth |
FY19 |
Organicgrowth |
Total |
11.2 |
|
12.0 |
% |
41.8 |
|
8.3 |
% |
Africa Middle East & Eastern Europe |
2.1 |
|
6.6 |
% |
7.2 |
|
11.7 |
% |
Americas |
3.8 |
|
26.6 |
% |
13.4 |
|
16.2 |
% |
Asia Pacific |
1.9 |
|
7.7 |
% |
6.2 |
|
2.2 |
% |
Europe |
3.4 |
|
4.0 |
% |
14.9 |
|
3.1 |
% |
The international brand portfolio grew
high-single digit, driven by the double digit growth of Tiger and
Amstel. Tiger performed strongly in Vietnam, Cambodia and Malaysia.
Amstel grew strongly in Brazil, Mexico, Russia, South Africa and
the UK.
Craft volume grew mid-single digit to 5.6
million hectolitres with a double-digit expansion in Europe
compensating for lower volume in the Americas. Strong performance
from craft propositions in Italy, France and Spain continued.
Lagunitas is now available in more than 35 markets with local
production in the Netherlands and Brazil.
Cider volume was stable at 5.6 million
hectolitres (2018: 5.6 million). Volume increased double digit
outside the UK, with South Africa and Russia in the lead. In the
UK, volume declined high-single digit mainly due to a challenging
comparable versus last year. We continue to shape cider in new
markets with encouraging results in Vietnam and Mexico. Cider is
now locally produced in 18 markets.
Low & No-Alcohol (LONO) volume increased
high-single digit, delivering 14.1 million hectolitres (2018: 13.1
million). The no-alcohol portfolio grew double digit, driven by
Heineken® 0.0, other line extensions of leading brands and beer
mixes. The Zero Zone, a dedicated shelf-space in the off-trade for
our non-alcoholic portfolio, is being deployed beyond Europe.
In addition to new products and categories,
innovation at HEINEKEN further includes draught
systems technology. Volume through our proprietary draught systems
grew double digit. The Blade, our counter-top draught system for
small outlets, is now available in 32 markets with a range of 30
brands.
Recognising the increasing importance of connecting in a
digital world with consumers and customers, in 2019 we
added a 5th pillar to our strategic priorities:
- Digital business-to-business platforms continue being deployed
at speed. At year end 17 markets were operational.
- Beerwulf, our business-to-consumer platform in Europe,
continues to gain scale in 11 markets.
- Our new Enterprise Resource Planning system for Asia Pacific,
Africa and the Caribbean (BASE), is now live in 16 of our 24
operations in scope, standardising core business processes and
making us more agile and efficient.
- In Europe we closed the preparation phase of our technology
upgrade programme and will now begin deployment of the first set of
capabilities. During 2019 this represented €37 million in
expenses.
Operating profit (beia) grew 3.9% organically,
driven by strong revenue growth partially offset by input cost
inflation and higher investments in global
sponsorships, e-commerce and technology upgrades.
BREWING A BETTER WORLD
Brewing a Better World, one of our five
strategic priorities, addresses our commitments to promote health
and safety in our operations, protect our water resources, reduce
CO2 emissions, source sustainably, advocate responsible consumption
and grow with the communities where we operate.
Over the past decade, we have lowered our water
usage by almost a third to 3.4 hectolitres of water per hectolitre
produced and 3.1 hectolitres in water scarce areas in 2019. As we
are ahead of our 2020 targets, in March 2019 we introduced our 2030
water ambition 'Every Drop'. Next to continuous improvement in
water consumption, we aim to improve the water catchment areas
surrounding our production sites. Today, 15 of our breweries in
water scarce areas have started water balancing projects, including
nature-based solutions like reforestation and wetland
restoration.
In 2018 we set out our 'Drop the C' programme to reduce
CO2 emissions, with an ambitious target to power our
production facilities with 70% renewable thermal and electricity
energy by 2030. Thermal energy accounts for nearly 80% of total
energy consumption in a brewery. We are at the onset of this
journey and reached 19% in 2019.
In 2019 we increased our local sourcing
percentage of agricultural supplies in Africa to 44%, although we
made progress we have much more to do to reach our ambition of
60%.
We spent over 10% of Heineken® media budgets on “When You Drive
Never Drink” and other responsible consumption
awareness campaigns in more than 60 markets.
For more details on our Brewing a Better World programs and
definitions please refer to our 2019 Annual Report.
NET PROFIT
Net profit (beia) increased 4.3% organically to €2,517 million
(2018: 2,385 million).
The impact of exceptional items and amortisation of
acquisition-related intangibles (eia) on net profit was €351
million (2018: €472 million).
Net profit after exceptional items and amortisation of
acquisition-related intangibles was €2,166 million (2018: €1,913
million).
TOTAL DIVIDEND FOR 2019
The Heineken N.V. dividend policy is to pay out a ratio of 30%
to 40% of full year net profit (beia). For 2019, payment of a total
cash dividend of €1.68 per share (2018: €1.60) will be proposed to
the Annual General Meeting on 23 April 2020 ("2020 AGM"). This
represents an increase of 5.0% versus 2018, translating into a
38.4% payout. If approved, a final dividend of €1.04 per share will
be paid on 7 May 2020, as an interim dividend of €0.64 per share
was paid on 8 August 2019. The payment will be subject to a 15%
Dutch withholding tax. The ex-final dividend date for Heineken N.V.
shares will be 27 April 2020.
TRANSLATIONAL CURRENCY CALCULATED IMPACT
The translational currency impact for 2019 was positive,
amounting to €80 million at consolidated operating profit (beia)
and €47 million at net profit (beia).
Using spot rates as of 7 February 2020 for the remainder of this
year, the calculated positive currency translational impact would
be approximately €55 million at consolidated operating profit
(beia), and €30 million at net profit (beia).
EXECUTIVE BOARD COMPOSITION
Following his successful 15 year leadership of the Company,
Jean-François van Boxmeer will hand over his responsibilities as
Chairman of the Executive Board and CEO of Heineken N.V. to Dolf
van den Brink on 1 June 2020. The Supervisory Board has announced
that it will nominate Dolf van den Brink to be appointed as member
of the Executive Board at the 2020 AGM for a period of four years.
Dolf van den Brink will, subject to appointment by the 2020 AGM,
join Heineken N.V. on 23 April 2020 as member of the Executive
Board, and will work alongside Mr. Van Boxmeer to ensure a smooth
and effective transition as Chairman of the Executive Board and CEO
of Heineken N.V. as of 1 June 2020. For more details please see the
press release as issued on 11 February 2020.
SUPERVISORY BOARD COMPOSITION
Mrs. Pamela Mars Wright will have completed her four-year
appointment term upon conclusion of the 2020 AGM. A proposal for
Mrs. Mars Wright’s reappointment as member of the Supervisory Board
of Heineken N.V. for a period of four years shall be submitted to
the AGM.
ENQUIRIES
Media |
Investors |
Tim van der Zanden |
José Federico Castillo
Martinez |
Director of
Global Communication |
Investor
Relations Director |
Michael Fuchs |
Janine Ackermann / Robin
Achten |
Financial
Communications Manager |
Investor
Relations Manager / Senior Analyst |
E-mail:
pressoffice@heineken.com |
E-mail:
investors@heineken.com |
Tel:
+31-20-5239355 |
Tel:
+31-20-5239590 |
INVESTOR CALENDAR HEINEKEN N.V.
Combined
financial and sustainability annual report publication |
21 February
2020 |
Trading Update
for Q1 2020 |
22 April
2020 |
Annual General
Meeting of Shareholders |
23 April
2020 |
Half Year 2020
Results |
03 August
2020 |
Trading Update
for Q3 2020 |
28 October
2020 |
Conference call details
HEINEKEN will host an analyst and investor conference call in
relation to its 2019 FY results today at 10:00 CET/ 9:00 GMT. The
call will be audio cast live via the company’s website:
www.theheinekencompany.com/investors/webcasts. An audio replay
service will also be made available after the conference call at
the above web address. Analysts and investors can dial-in using the
following telephone numbers:
United Kingdom (Local): 020 3936 2999 |
Netherlands: 085 888 7233 |
USA:
1 646 664 1960 |
All other
locations: +44 20 3936 2999 |
|
Participation password for all countries: 595244 |
Editorial information:
HEINEKEN is the world's most international brewer. It is the
leading developer and marketer of premium beer and cider brands.
Led by the Heineken® brand, the Group has a portfolio of more than
300 international, regional, local and specialty beers and ciders.
We are committed to innovation, long-term brand investment,
disciplined sales execution and focused cost management. Through
"Brewing 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.We
employ over 85,000 employees and operate breweries, malteries,
cider plants and other production facilities in more than 70
countries. Heineken N.V. and Heineken Holding N.V. shares trade on
the Euronext in Amsterdam. Prices for the ordinary shares may be
accessed on Bloomberg under the symbols HEIA NA and HEIO NA and on
Reuters under HEIN.AS and HEIO.AS. HEINEKEN has two sponsored level
1 American Depositary Receipt (ADR) programmes: Heineken
N.V.(OTCQX: HEINY) and Heineken Holding N.V. (OTCQX: HKHHY). Most
recent information is available on HEINEKEN's website:
www.theHEINEKENcompany.com and follow us on Twitter via
@HEINEKENCorp.
Market Abuse RegulationThis 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 with regard to the financial position and results of
HEINEKEN’s activities. These forward-looking statements are subject
to risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors
that are beyond HEINEKEN’s ability to control or estimate
precisely, such as 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, interest-rate and exchange-rate fluctuations, changes in
tax rates, changes in law, 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 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.
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