Heineken Holding

Good afternoon from Amsterdam, everyone. Thank you for joining us today for today's live webcast of our 2024 Q3 training update. Your host will be Havel from the book, our CFO. Following the presentation, we will be happy to take your questions. The presentation includes forward-looking statements and expectations based on management's current views and involve known and unknown risks and uncertainties, and it is possible that the actual results may differ materially. For more information, please refer to the disclaimer on the first page of this presentation. I will now turn the call over to Harald.

Thank you, Tristan, and welcome everyone. Thank you for joining us today. We appreciate the interest in our company. Let me now take a few minutes to give you a summary of the quarter and then indeed open the line for questions. We posted a quarter of solid balanced growth. Despite some markets navigating known and new challenging consumers and industry trends, we delivered to our plan. The top line delivery was well balanced between volume and value, and our underlying premiumization trends remain strong. We also confirm and reiterate all elements of our expectations previously reported, including expected operating profit by our organic growth of 48% for the year 2024. Let us now look at some highlights. Group net revenue Bayer was 9.1 billion euros, an increase of 3.3% organically in the quarter, more than 5% year-to-date. And revenue Bayer per hectolitre increased by 2.6%, for a large part due to inflation-led pricing in Africa and premiumization throughout the group. Beer volume was up by almost 1% organically, and our premium beer portfolio grew by 5%. Brand Heineken was up by almost 9%, consistent with our performance year-to-date. Unpacking the Q3 revenue bridge, we delivered an organic growth of €268 million, so 3.3% net revenue Bayer. Total consolidated volume on an organic basis was up 0.7%. The underlying price mix on a constant geographic basis was up 3%, ahead of the net revenue Bayer per hectolitre. The difference is caused by a dilutive geographical mix impact, as the net revenue by a per hectolitre, for example, in Nigeria and India, is below the Heineken average. Mix declined slightly in the quarter, as the positive contribution from premiumization was more than offset by an adverse channel mix, with the on-trade softer, especially in Europe. The translation of foreign currencies had a negative effect of 470 million euros, or 5.9%, mainly due to the devaluation of currencies in Africa, particularly the Nigerian Naira and the Ethiopian Bir, as well as in Latin America with the Brazilian Real and the Mexican Peso. Consolidation changes in net revenue Bayer reduced revenue by 132 million, mainly from the disposal of Fremona in the Netherlands and our exit from Russia. Our growth in quarter three has been balanced and shows our evergreen strategy continues to deliver. Premium volume, as said, grew 5% ahead of our total portfolio. The growth has been delivered by a wide range of premium brands and extensions across our regions, including Kingfisher Ultra in India, Bira Moretti in Europe, and Savanna in Southern Africa. and of course led by Heineken, which was up 9%. Additionally, our non-alcoholic beer and cider portfolio grew 11%, further consolidating our leadership in this segment. Let's now take a closer look at the regions. Let me start with Africa and Middle East. Net revenue Bayer grew 23% organically, with total consolidated volume up almost 14.5% due to strong pricing across the region to offset inflation and the impact of currency devaluations. In the region, we continue to structurally adapt to strengthen our business model to profitably grow and win in a more volatile environment, as exemplified in the quarter by the recapitalization in Nigeria and rebuilding momentum in Southern Africa. Beer volume increased organically by 6.4%, with strong growth in Nigeria, South Africa, and Namibia, more than offsetting declines in Ethiopia and Burundi. Premium volume grew in the high teens, led by Heineken and Savala Cider. In Nigeria, we're building a sustainable business model to win in an at-present economically challenged market, yet we believe with long-term strategic prospects. In that context, on the 18th of October, when Heineken is supporting the offer and exercising its right in full. With a strengthened balance sheet, Nigerian breweries will be in a stronger position to unlock future opportunities. In the quarter, beer volume grew close to 30%, with premium volume growth at double that rate, led by our dark beer innovation Goldberg Black, Desperados and Heineken. High inflation-led pricing in the quarter was needed to offset the significant devaluation of the Nigerian Naira. As it stands currently, we anticipate Nigeria to be labeled as hyperinflationary at the end of the year. We will update the market at our full-year results, but this may potentially trigger a non-cash impairment if it does occur. Now to South Africa, where Dolph and I were last week. Total volumes in the quarter expanded in the low teens as we cycle last year's integration challenges now firmly behind us. Beer volume grew in the low 20s, led by Heineken, Windhoek and Amstel, and we built momentum behind our multi-category business model and delivered growth in all categories. We were pleased to see the Heineken returnable bottle landing well in the market. Whilst there is more to do in our beer portfolio, our cider Savannah and ready-to-drink Bernini grew double digits, outperforming the market and expanding further into Africa. Moving to the Americas. Net revenue Bayer grew close to 2% organically, with total consolidated beer volume declining 1%, and price mix on a constant geographical basis was just up over 3%, led by pricing and the continued premiumization of the portfolio. Beer volume growth in Brazil partly offset declines in Mexico and the USA, both of which are currently experiencing soft industry trends. A premium portfolio grew by a mid single digit led by Heineken. The Mexican market has been less robust with some short-term economic setbacks post the recent under increased pressure. Our market share remained broadly in line with the market, despite some short-term capacity constraints for cans, a fast-growing peptide. We nevertheless achieved solid volume growth in our affordable premium proposition Dos Equis and mainstream brands Tecate Original and Indio, a local brand rooted in Mexican pride. In Brazil, the premiumization of our portfolio continues. Despite pressure and discounted we continue to purposefully and actively shape our portfolio towards the more attractive premium and mainstream segments. Beer volume grew by low single digit, led by Heineken and Amsel, both up in the teens. We expanded our zero alcohol portfolio with the launch of the vitamin-enhanced Sol Zero, containing vitamin D and B, as you can see on the slide. In the United States, the well-publicized weakness in the market in the Zero-Zero alcohol segment. Heineken Zero-Zero recorded double-digit growth as it delivered its 20th consecutive quarter of growth. Now on to Asia-Pacific. Net revenue Bayer declined slightly, with consolidated beer volume down by 1%, and price mix on a constant geographical basis up 1.5%. Despite encouraging progress in our largest markets, the quarter was impacted by lower revenues in Cambodia, where local competition and promotional pressure intensified in a declining market. In Vietnam, beer volume reduced by a low single digit, trailing slightly the beer market, which nevertheless shows further signs of stabilizing over the quarter. The off-trade beer market is back in growth, and we are seeing declines in the on-trade moderating. As the economy strengthens and degree 100 implementation is cycled next quarter, we are cautiously optimistic and expect a return to a stable beer market. Adjusting to the new market reality, which see consumers shifting towards mainstream brands and home consumption, we are increasing our investments behind brands and balancing the portfolio. Whilst there is more to do, this more segmented approach is working. Heineken volume grew in the 40s, led by the continued success of Heineken Silver, which recorded its 12th consecutive quarter of growth. Our mainstream brands Biaviet and Bière La Rue grew in the double digits. In India, beer volume grew by a mid single digit, continuing its growth momentum. As market leader in the world's most populous market, and shaped the beer category to unlock the inherent growth. Premium volume grew in the 30s, led by Heineken Silver, Kingfisher Ultra, and Kingfisher Ultra Max. In China, Heineken grew in the 20s, with continued momentum of Heineken Original and Heineken Silver significantly outperforming both the premium segment and the broader and also weaker industry. And finally, a word on Europe. Net revenue buyout declined just over 1%, with beer volume increasing over 1%. Price mix on a constant geographic basis decreased 0.5%. However, it is worth the moment to emphasize that we maintain stable pricing across Europe, which was slightly offset by the mix impact of lower volume in the on-premise, third-party wholesalers, and intercompany exports. In a subdued consumer environment that is Europe at this moment in time, we are focused on remaining competitive by increasing investment behind our brands and balancing pricing with consumer affordability. This we achieved in the quarter as we grew volume and gained share in the majority of our markets. Premium beer volume outperformed, growing a mid-single digit led by Biero Moretti, Desperados and Heineken, alongside next-generation brands such as Alegila in Spain and Tessels in the Netherlands. We're also pleased that in the quarter, Vero Amretti became the number one brand in the UK off-premise. Let us now move on to discuss the Heineken brand performance in more detail. The Heineken brand continued to show great momentum and grew volume 9% with double-digit growth in more than 30 markets. The brand saw its strongest growth in our largest markets of Brazil and China, as well as noticeable growth in South Africa and in Nigeria. The growth was supported by a solid performance of all its line extensions, with Heineken 00 growing in all regions. Heineken Silver grew close to 30%, primarily led by Vietnam and China. Moving on to the last slide, our outlook. Reflecting our confidence in delivery and our commitment to invest behind growth and to future-proof our business, we confirm and reiterate our full-year outlook as previously communicated. This includes our expectation to grow operating profit buyer organically in the range of 4% to 8%, and for organic net profit buyer growth to be closely in line. As we spoke about at the half-year results, stepping up investments in our brands focused on our greatest opportunities for long-term sustainable growth. With that, I would like to open the line for Q&A and thank you for listening.

Thank you. Our first question today comes from Edward Mundy with Jefferies. Please go ahead.