Heineken’s consolidation of Distell and and Namibia Breweries had positively impacted the Dutch global beer brewers net revenue by €887 million (R18 billion), or 3.1%, in its 2023 financial year, the results showed yesterday.

The approximate R40bn acquisition of Distell and Namibia Breweries had extended the group portfolio and had created a new beverages champion in southern Africa, the Amsterdam listed brewer said.

The group had also exited Russia in the third quarter.

Over the past year Heineken faced pricing to offset unprecedented levels of commodity and energy inflation, which impacted consumer off-take. In the second half, however, pricing moderated and volume trends improved in most of Heineken’s markets.

Group revenue for the year increased 4.9% to €36.4bn. Net revenue increased by 5.5% organically, with net revenue per hectolitre up 10.8% and total consolidated volume declining by 4.7%.

However net profit was down 14% to €2.3bn in 2023 compared with €2.68bn a year earlier, which, according to other media reports, was lower than most analyst estimates.

The share price was trading 6.27% lower in Amsterdam yesterday late afternoon, a large decline indicative of shareholder surprise at the results.

Beer volume declined 4.7% organically for the full year. Vietnam and Nigeria represented over 60% of the decline, with both markets affected by challenging economic conditions. Heineken beer volumes increased 2.5% (excluding Russia 3.4%).

Heineken wrote down its South Africa business by €491m, or 16%, the results showed. News24 reported this was due to rising interest rates and volume declines that had forced it to pick up its promotional activity.

Heineken’s acquisition of Distell and Namibian breweries had brought the group new brands such as Amarula, Savanna and Nederburg.

At the end of Heineken’s third quarter, Heineken Beverages revenue declined by a mid-single-digit, driven by the beer volume, down in the twenties and below the category growth, due to a challenging competitive environment at the time of the integration of Distell.

At year end, the group’s Africa & Middle East division, comprising markets in Ethiopia, Nigeria and South Africa, grew revenue 11.6% and the division generated operation profit growth of 2.8%.

Looking to 2024, Heineken’s board said they remained cautious about the global economic and geo-political outlook.

“We expect our variable costs to increase by a low-single-digit on a per hectolitre basis, benefiting from lower commodity and energy prices, but more than offset by local input cost inflation and currency devaluations, particularly in Africa.

“We also expect higher than historical average wage inflation to impact our cost base,” it said.

BUSINESS REPORT