Dutch brewer Heineken's 2024 profit could fall significantly below analyst estimates owing to geopolitical and economic volatility, it said on Wednesday, sending its shares down as much as 6.5%.
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.
Cautious Outlook
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.
Vietnam And Nigeria
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. Some analysts said its 2024 outlook could prompt cuts to consensus earnings forecasts.
Brand Investment
But Steve Minnaar, a fund manager at Abax Investments, which holds Heineken stock, said it would take a "brave CEO" to give bullish or precise forecasts in the current environment.
"There's nothing wrong with being a little more conservative and over-delivering," he added.
Heineken said it would look to focus on restoring volumes through measures including investment in its brands.
Organic Operating Profit
Costs are still expected to rise, it continued, adding that it will deliver at least €500 million in gross savings in 2024 - €100 million ahead of target.
Heineken reported a 1.7% rise in 2023 organic operating profit, beating analyst expectations.
Impairment Charge
It booked a €491 million impairment charge related to its southern Africa division, formed after the 2021 acquisition of South African drinks group Distell and Namibian Breweries.
Heineken's shares recovered slightly to stand 4.7% down by 0849 GMT.
