Financial Data and Key Metrics - Group revenue increased by 8.9% organically to EUR 6.4 billion, driven by a 12.1% increase in price mix on a constant geographic basis, offsetting a 3% organic decline in beer volume [7] - Operating profit beia is expected to grow organically in the mid to high-single digits for the full year, with growth likely to be more concentrated in the second half [25] Business Line Performance - Heineken Brand: Volume grew 5.7% excluding Russia, with over 25 markets growing double digits, particularly in Brazil and China [15] - Heineken Silver: Grew 47% organically, with strong momentum in Vietnam and China, and launched in the U.S. with rapid distribution build-up [16] - Heineken 0.0: Grew 6.9% organically excluding Russia, with strong performance in Brazil, the U.S., UK, Spain, and the Netherlands [16] Regional Performance - Africa, Middle East, and Eastern Europe: Net revenue beia grew 3.6% organically, but beer volume declined 8.3%, with significant declines in Nigeria and South Africa partially offset by growth in Ethiopia [8] - Americas: Net revenue beia grew 14.8% organically, with beer volume up 3.4%, led by strong performance in Brazil and Mexico [10] - Asia Pacific: Net revenue beia declined 5.4% organically, with total volume down 10.5%, driven by declines in Vietnam and Cambodia [11] - Europe: Net revenue beia grew 13.5% organically, with total volume down 1.3%, outperforming expectations due to resilient consumer spending [13] Strategic Developments and Industry Competition - The company is on track to close the Distell transaction, which is expected to add EUR 1.6 billion in gross revenue and EUR 160 million in operating profit, with synergies of EUR 75 million to EBITDA [17][21][22] - The company is focused on premiumization, digital route-to-consumer, and sustainability under its EverGreen strategy [6][24] Management Commentary on Operating Environment and Future Outlook - The company remains cautious about the impact of a volatile global economy on consumer demand, particularly in Asia Pacific, but sees resilience in Europe [24][25] - Management reiterated full-year guidance, expecting mid to high-single-digit organic growth in operating profit beia, with growth likely to be more concentrated in the second half [25] Other Important Information - The company has submitted an application for approval regarding the transfer of ownership of its Russian business, with limited details available due to ongoing processes [26] Q&A Session Summary Question: Investment behind brands - The company has materially increased investment behind its brands, focusing on premiumization and growth markets, with timing and focus on markets like Mexico, Brazil, and Vietnam [27][28] Question: Confidence in full-year guidance - The company is confident in its EverGreen strategy and ability to adapt to market conditions, with a focus on controllables and agility [32][33] - Vietnam's market grew 6% in volume according to Nielsen, with the company performing broadly in line, but overstocking in Q4 2022 led to inventory challenges [38][39] Question: Distell integration and pricing strategy - The priority for Distell integration is to focus on people, governance, and winning the season, with growth and synergies to be discussed in the coming months [44][45][46] - Pricing strategy will be market-by-market, with the company comfortable with Q1 pricing and taking a step-by-step approach to further pricing later in the year [49][50] Question: U.S. and Europe performance - Heineken Silver's U.S. launch is in early stages, with positive distributor feedback and strong consumer taste profiles [55] - Europe's performance is balanced between on-trade and off-trade, with on-trade still below 2019 levels but showing resilience [57] Question: Vietnam and Nigeria - Vietnam's destocking is ongoing, with industry-wide overstocking due to misread signals in Q4 2022 [61][62] - Nigeria's volume decline is expected to improve, with a focus on premiumization and market share retention [64][65] Question: Brazil and commodities - Brazil continues to perform strongly, with Heineken and Amstel driving growth, though the company cautions against expecting perpetual high growth [77][78] - Commodity prices are trending down, but it is too early to provide guidance for 2024 [80]
Heineken(HEINY) - 2023 Q1 - Earnings Call Transcript