By Michael Susin
Heineken is scheduled to report results for the third quarter on Wednesday. Here is what to know.
SALES FORECAST: The Dutch brewer is forecast to report adjusted net revenue before exceptional items and amortization--one of its preferred metrics--at 7.78 billion euros compared with 8.015 billion euros last year, according to a company-provided market consensus based on 19 brokers' estimate.
ORGANIC REVENUE GROWTH: Adjusted consolidated net revenue is expected to grow organically at 3.2%, with increases across all regions, according to the company-compiled consensus. Europe revenue is expected to grow 0.3%, Americas by 1.6%, Africa, Middle East and Eastern Europe by 19.5%, and Asia Pacific by 0.8%.
The Africa Middle East and Eastern Europe's region represents the smallest revenue stream for the company, with consensus expectations standing at 964 million euros compared to 3.41 billion euros expected in Europe and 2.56 billion euros in the Americas.
BEER VOLUMES FORECAST: Total organic beer volumes are expected to grow be 0.5%. Volumes in the Africa, Middle East and Eastern Europe market are forecast to grow 2.4%, followed by 1.1% growth in Europe and 1.0% in Asia Pacific, while Americas region volumes are expected to decrease 0.9%.
WHAT TO WATCH
Share are down 16% since the start of the year, and down 6.2% over the past 52 weeks.
--GUIDANCE: Heineken currently expects adjusted operating profit for 2024 to grow organically in the range of 4% to 8%, with current market expectations at 6.1%. The Dutch brewer also now expects adjusted net profit organic growth to be more closely in line with inorganic growth, rather than lower as it previously guided.
-- PROFIT EXPECTATIONS: The company's adjusted operating profit for the year is expected to grow 6.1%, according to the company-compiled consensus, and adjusted net profit for the year is anticipated to be flat on year at 2.63 billion euros.
-- INVESTMENT: The company previously said it would materially step up the investment on its brands in the second half as it focuses on their long-term sustainable growth. Notable increases will be in Mexico, Brazil, Vietnam, India, and South Africa, it said.
-- AMERICAS MARKET: Heineken previously said operating profit in the Americas soared, driven by both revenue, lower costs and positive currency effects. The company currently sees Brazil as one of its biggest profit contributors and the country is firmly in the double-digit operating margin. However, Heineken warned that Brazil's mainstream segment had been hit by a price war in economy brands started by a local competitor. "We are quite balanced in that we don't want to engage in that segment of the market. And as such, we have accepted a double-digit decrease in our economy brands volume," it said.
-- EUROPE MARKET: In Europe, the company said on-trade volume--at premises like bars or pubs that sell beverages for immediate consumption--remains behind prepandemic levels by more than 10% and that it expects flattish volumes ahead. The company said it was taking productivity initiatives in the region that would provide margin expansion over time, which are expected to bring some initial results in the second half of the year.
Write to Michael Susin at michael.susin@wsj.com
(END) Dow Jones Newswires
October 22, 2024 07:01 ET (11:01 GMT)
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