Dutch brewer Heineken (AS:HEIN)’s 2024 profit could fall significantly below analyst estimates owing to geopolitical and economic volatility, it said on Wednesday, sending its shares down 5.7%.
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, given the volatile global environment.
It had already warned that tough economic conditions could weigh on demand in some markets this year.
“We remain cautious about the global economic and geopolitical outlook,” Chief Executive Dolf van den Brink said in the company’s full-year results statement, adding that Heineken aims to drive revenue by a balance of volumes and prices.
Beer brewers raised prices significantly throughout 2023 to offset steep increases in costs, hurting volumes.
Heineken’s volumes fell by 4.7% organically in 2023, with more than 60% of that driven by declines in Vietnam and Nigeria, where economic and political conditions hurt sales.
The company cut its 2023 forecast in July, citing turmoil in those markets, and Wednesday’s 2024 guidance failed offer much more cheer.
RBC analyst James Edwardes Jones described the latest guidance as “underwhelming” given the “widespread expectation … of a significant margin tailwind as commodity costs decline”.
Heineken said it would look to focus on restoring volumes including by investing in its brands.
Costs are still expected to rise, it continued, adding that it will deliver at least 500 million euros ($535.85 million) in gross savings in 2024 – 100 million euros ahead of target.
Heineken reported a 1.7% rise in 2023 organic operating profit, beating analyst expectations.
