Heineken Holding

Good morning, and good afternoon, everyone from Amsterdam. Thank you for joining us for today's live webcast on our 2025 full-year results. Your host will be our Chief Executive Officer, Tole van den Brink, and our Chief Financial Officer, Harald van den Broek. Following the presentation, we will be happy to take all your questions. The presentation includes 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 this first page of the presentation. I will now turn over the call to Dolf van der Beek.

Thank you, Tristan, and good morning, afternoon, everybody. Now, after six years and with some understandable mixed emotions, today is my final full year results presentation as CEO. It is not a farewell, though. I am and will be fully focused and committed to the business through the end of May. And as you all know, I love this great company and I will miss it dearly. My priority for the coming months is to leave Heineken in the strongest possible position with momentum, clarity and ambition. It is a natural moment to reflect on how far we have traveled since launching Evergreen in 2020 in the midst of COVID and to look ahead as we move into the disciplined execution of Evergreen 2030, our new five-year growth strategy. Over the last six years, we launched a fundamental transformation of the company, delivered Evergreen 25, and navigated a demanding external environment. We have made meaningful progress in future-proofing Heineken, growing the Heineken brand by more than 50%, consolidating our global leadership in 00, strengthening our advanced footprint with significant deals in India, Southern Africa, and Central America. while saving over 3.5 billion in cost and digitizing the business. I am very proud of what we as a team have achieved, and there's more to do. The next chapter is our Sharpened Evergreen 2030 strategy, which we introduced at the Capital Markets event as a V. We now have a sharpened focus on three strategic priorities, and the task ahead is accelerating disciplined execution. Growth, it is the foundation of our business and remains our number one priority. Productivity, which fuels reinvestment and healthy profit flow through. Future-fitting Heineken, enabled by our digital background and evolving operating model. Harold will explain how we are accelerating the disciplined execution of these priorities over the next few years. With this clarity, we aim to deliver superior and balanced growth and attractive shareholder returns while future-proofing Heineken. We practice through the green diamond, which we have now strengthened with ROYC as our capital efficiency KPI. Let's take a closer look at the key highlights of 2025. First, we delivered a well-balanced performance in challenging market conditions. In our growth pillar, we grew revenue through quality volume. We gained or held market share in more than 60% of our markets and in about 80% of our priority growth markets, which is even more important. In our productivity pillar, strong over-delivery of growth savings supported our margin expansion. On capital efficiency, we generated another year of solid cash flow and improved ROIC. And looking ahead, we expect operating profit to grow between 2% and 6% in 2026. This is before the additional profit and earnings accretion from the FITCO acquisition we completed last month. So let's take a closer look at our financial highlights. Total volume declined by 1.2%, reflecting softer markets in the Americas or Europe, partly offset by consolidated volume and licensed volume growth in APAC, and resilience in Africa and Middle East. Within that, the momentum behind the Heineken brand continued, growing 2.7%. Net revenue increased 1.6%, and net revenue per hectare grew 3.8%, driven by disciplined pricing and positive mix. Operating profits grew 4.4%, with a 41 basis point margin expansion, and net profits grew faster at 4.9%. Diluted EPS buyer came in at 4.78%, And we are proposing a total dividend of €1.90 per share, a 2% absolute increase, indicating a payout to 39% of net profit. We're also expanding our payout range for future years to be 30% to 50%. Harald will cover this in more detail later. Although our volume declined in a year, and is not yet where we want it to be, the quality remained high. To better reflect our evolving asset-light approach in China, Latin America, and Africa Middle East, we will, going forward, report total volume, combining consolidated volume, which declined 2%, and licensed volume, which grew almost 18%. Our mainstream brands outperformed the total portfolio, declining only slightly. and local power brands delivered solid growth across several major markets, including Cruz Campo in the UK, Harar in Ethiopia, Tecato Original in Mexico, and Kingfisher in India. Heineken 00 grew slightly. Our global brands grew almost 2% left by Heineken, up nearly 3%. The broader premium portfolio also performed well, supported by strong local brands such as Kingfisher Ultra in India, Bernini in South Africa, and Legend Stout in Nigeria. This high-quality volume supported 2% net revenue growth with positive price mix across all regions. Our productivity programs ensured solid revenue-to-profit conversion, contributing to an operating profit growth of 4.4% in line with our guidance. Let me turn to the Heineken brand, which continues to lead our portfolio. Heineken delivered another year of growth in 2025, increasing by almost 3%, with 27 markets growing at double-digit rates. Heineken continues to stand out for its creativity in both idea and execution. At a time when people seek more real-world connection, Heineken champions socializing in a way that's authentic to who we are, supported by our global partnership with Formula 1 and the men's and women's UEFA Champions League. Heineken 00 grew slightly. Inventory adjustments in Brazil, its largest market, partly offset good growth in Spain and the United States. And it maintained its position as the world's largest alcohol-free beer brand. It is Heineken's silver that truly drove the growth for the brand. Silver grew by almost 30%, led by Vietnam and China. As you can see on the chart, silver now represents about 15% of the total Heineken volume, close to 9 million hectoliters. It can now be considered one of the most successful innovations in the history of the Heineken company. As part of the growth pillar in our Sharpened Evergreen 2030 strategy, we're expanding our global brands. We're applying the principles of the centrally-governed Heineken brand model across the broader global brand portfolio, strengthening consistency and discipline in execution. Across the global brand portfolio, we delivered 1.9% total volume growth in 2025, which shows solid progress. We have already spoken about Heineken. Amstel, our shadow premium brand, connects friends around the world with a distinct social character. Amstel delivered another strong year across all four regions. with continued momentum in Brazil, a doubling of volume in China, a revitalizing launch in Romania, and a double-digit growth in South Africa. Big Amoretti continued to unlock food pairing locations across Europe, supported by good performances in Switzerland and in France. Tiger remained a cornerstone of our success in Myanmar, while Tiger Crystal, a more refreshing, sessionable member of the family. delivered strong results and contributed to the brand's revitalization in Vietnam. Desperados reinforced its relevance in markets with its bold flavors and Latin-inspired positioning resonates strongly with Gen Z consumers, especially in Nigeria and in Spain. Productivity is our second strategic priority, and it's vital to support our growth agenda. This year we delivered over 500 million in growth savings, with increased flow-through to profits seen in our 41 basis point margin expansion. Our focus to boost cash led to a cash conversion of 87% after posting 103% last year, allowing us to deliver 2.6 billion of free operating cash flow. How we will expand on this and also how we will accelerate the Evergreen 2030 productivity agenda. When we look at our third strategic priority, future-proofing our business, Rule a Better World remains our framework for delivering our environmental, social, and responsibility ambitions. On responsible consumption, we continue to lead the category by ensuring zero alcohol options are widely available and easy to choose. In 2025, our operating companies invested 26% of Heineken Brand Media to promote this message, reaching 1.4 billion consumers. On carbon, we continued progressing toward our 2030 net zero ambition for scope 102, reducing emissions by 38% over the last three years. On water, we improved efficiency across all breweries to 2.9 liters per liter of beer. On the social pillar, we continue building a culture of belonging by equipping leaders and colleagues across the company. In 25, women held 31% of senior management roles. With that, let me move to the regions. Starting with Everda Middle East, where we delivered strong revenue growth, substantial profit improvements, and overall market share gains. Net revenue grew 16%, with stable volume and a strong price mix reflecting earlier pricing actions as inflation eased. Operating profits increased 60%, supported by the transformed cost base of the past two years and a strong ton line growth. Notably in euros, operating profit grew more than 30%. In Nigeria, last year's cost base and capital structure adjustments combined with continued discipline resulted in strong financial performance. Despite the soft market, Nigerian breweries gained significant share across lager, stout, beyond beer and non-alcoholic malt. Premium brands Heineken, Desperados and Legend stout all delivered double-digit growth. At Heineken Beverages in Southern Africa, commercial execution strengthened through the year. Our beer portfolio grew, with Amstel delivering particularly strong results in South Africa. Bernini, our wine-based spritzer, continued to grow and expand its consumer base. I would also like to highlight Ethiopia. The business improved steadily as the economy stabilized following the currency devaluation. We reinforced our market leadership and now secured the number one position in the North too, supported by continued momentum from Bedele and Harare. Turning to the Americas, our business showed resilience. Markets softened as the year progressed, requiring agility while keeping strategic investments on track. Even in this environment, we gained overall share in the region. Net revenue declined 1% and beer volume was down 3%, while price mix recovered strongly in the second half, up 2%. Operating profit declined 2%, deciding last year's significant step up. In Mexico, despite macroeconomic and geopolitical uncertainties, the beer category remained resilient. Our system strength, supported by the six-store network and effective revenue management, delivered solid financial results. Growth was broad-based. The Cato Original, Indio and Carta Blanca performed steadily and Miller High Life surpassed the 1 million hectolitre mark in premium. In Brazil, after rebalancing and reducing excess inventory in the first half, the market softened in the second half. Based on sell-out data, we captured significant market share. Investment increased again in 2025, including the opening of the new 5 million hectolitre Passos brewery. Amstel maintained strong momentum, supported by our conmebol Libertadores partnership and the success of Amstel Ultra. In premium, Heineken gained share and Eisenbahn delivered double-digit growth. The United States remains challenging, further impacted by tariffs introduced in the first half. We continue to work on strengthening our portfolio, including the return of the most interesting men for Dos Equis last month. Heineken 00 remains a highlight, delivering its seventh consecutive year of depletion growth. Moving on to APEC, where we delivered growth across all metrics and gained overall market share. Total volume increased 4%, with consolidated beer volume slightly up and license volume up 27%. Net revenue grew 4%, supported by a strong price mix of almost 5%. Operating profit grew 5%, driven by strong performances in Vietnam, India and Myanmar. In Vietnam, volume grew high single digit as the market returned to positive momentum. A strengthened route to consumer and effective portfolio expansion enabled outperformance in both on- and off-premise channels, accelerating our leadership position. Heineken grew in the high 30s, led by Heineken Silver, while the Ruth's move continued expanding its footprint. In India, volume grew mid-single digit, ahead of the overall market. As the country's largest brewer, we continued shaping the category, expanding our reach and transforming our sales model. Kingfisher maintained its growth trajectory, supported by cricket sponsorships. while the premium portfolio grew strongly, led by Kingfisher Ultra, Ultra Max, Heineken Silver, and our latest innovation, Amstel Grande. In China, Heineken Original and Silver delivered another year of double-digit growth, supported by strong execution and high-impact sponsorship, such as Master Stannis and the Shanghai Formula One. Amstel also doubled volume through distribution gains and excellence in market executions. With the increasing contribution of royalties and share of associate profits, China became the top three market for the group in delivering net profit in 2025. Turning to Europe, our performance was mixed in a challenging environment. Overall market share contracted slightly due to retailer disruptions, although we gained share in the on-premise channel. Net revenue and total volume each declined 3%, with price mix just above 1%, supported by pricing and a stronger premium portfolio. Operating profit declined almost 5% as volume deleverage and inflation more than offset strong growth savings, including continued progress on supply chain rationalization, brewery closures, and the refinement of our intermarket sourcing model. In the United Kingdom, our broad portfolio, innovation pipeline, and continued investment in the Starbucks estate supported solid financial performance. Cuscampo continued its exceptional trajectory, now in its third year. Murphy Stout outperformed the growing Stout category through distribution gains and expanded draft presence. Insider premiumization continued with strong growth from Inges and Old Moods. We also received top honors in the advantage survey where customers rated us the number one supplier across all FMCD companies in both on-trade and the grocers in the off-trade. In Western Europe, extended negotiations with off-premise buying groups weighed on performance. These discussions focused on protecting long-term sustainable category development were fully resolved in the second half with distribution and sales space recovering as the year progressed. Despite the disruptions, we gained on-premise share and continue to see strong contributions from our premium portfolio, including Gallia, Tessels and Stealths. Our global brands also performed well in selected markets, including Heineken in Italy, Viramaretti in Switzerland, Amstel in Romania and Desperados in Spain. And let me now turn to our newest operating company. On January 30, we completed the acquisition of FIFCO after receiving all regulatory approvals. This transaction significantly strengthens our presence in Central America and advances Evergreen 2030 by bringing together a portfolio of high-quality assets that enhances our long-term growth platforms. It deepens our advantage geographical footprint in markets, supported by strong macroeconomic fundamentals and favorable demographic trends. Through this acquisition, we gained full control of Costa Rica's leading beverage company, including iconic brands such as Inverial, a well-established PepsiCo franchise, and attractive adjacent businesses in wine experience and in proximity retail. We also assume full ownership of Heineken Panama, a consistent strong performer that has repeatedly outpaced market growth. In addition, the transaction provides an equal partnership in Nicaragua's leading brewer, Compañía Ceberacera de Nicaragua, expands our access to a scalable food and beverage platform in Guatemala, and adds fast-growing beyond beer brands in Mexico. The acquisition is expected to be value-accreted, enhancing our operating profit margin, and earnings per share, while strengthening our strategic position across a dynamic, high-growth region. On day one, we welcomed our new colleagues to the Heineken family and began the integration process, which is expected to complete in 2026. We have appointed a strong integration team to ensure business continuity while driving growth. Harold will take you through the financials of FIFCO, which will be accretive to earnings in 2026. And with that, Over to Harold to discuss the financials.

Thank you, Dolf, and good morning all. I'm pleased to take you through the financial highlights of our full year 2025 results from the outlook for 2026. And starting with our top-line performance on slide 17, we posted an organic growth of half a billion, or 1.6%. The 2.1% volume decline was more than offset by a positive price mix of 4.1%. Pricing contributed 2.8% and mix added another 1.3%, a result of continued premiumization and strong execution behind our global and local power brands. Pricing was more pronounced in Africa and Middle East, covering for local input cost inflation and currency devaluation, while in Europe and America our revenue per hectare growth was very moderate. Currency translation dampened revenue by almost 1.5 billion, reflecting the strengthening of the euro against some of our key currencies. The minor consolidation effect of minus 84 million relates to our exit of Sierra Leone and a brewery sale in eastern Congo. turning to operating profit, where we delivered 4.4 billion of operating profit buyer, growing 4.4% organically, and resulting in an operating profit margin buyer of 15.2%, up 41 basis points organically versus last year. The 467 million of organic net revenue buyer growth on the previous page translated to 198 million organic operating profit growth, a conversion rate of 42%. With negative volume leverage, moderate pricing and continued investments in brand and digitalization, gross savings from our productivity programs were a critical driver. Variable cost per hectolitre increased by low single-digit, with meaningful differences across regions. Ranging from mid-single-digit decrease in Europe, low single-digit increases in Americas and Asia-Pacific and high single-digit inflation in Africa and Middle East. Marketing and selling investment as a percentage of net revenue reached 9.9%, up 6 basis points compared to the prior year. Investments concentrated on our priority growth markets, including Brazil, Mexico, US, South Africa, Vietnam, UK and India, with a meaningful step up in sponsorships and in trade execution, and particularly in Africa, Middle East and Asia Pacific. Marketing and selling expenditure on our five global and 25 local focus brands accounted for over 80% of total spent. On a regional level, the main contribution to operating profit growth was the Africa-Middle East region, where operating profit grew 62%, as Dolph said, benefiting from a transformed cost base from productivity savings delivered over the past two years and revenue growth outpacing inflation. Operating margin Bayer improved over 400 basis points, now reaching 12.8% for the year 2025. In APAC, operating profit grew by 5.8%, with strong contributions from Vietnam, India and Myanmar, held back by Cambodia. In the Americas, operating profit declined 1.9%, incorporating the tariff impact on imports into the USA. Also worth bearing in mind that we cycle a strong prior year comparison, where the region grew operating profit by almost 25%. And finally, in Europe, operating profit declined 4.9%. Decreases in Poland, Austria and France outweighed growth in the UK and Spain. Lower material and energy costs and strong growth savings included further European supply network rationalization were more than offset by volume deleverage and general inflation. Consolidation changes had a negative impact of 36 million euros. Translational currency effect was 290 million negative, again mainly caused by the strengthening of the euro. Let me turn to the other key financial buyer metrics on slide 19. On the second line, you see that our share of profit buyer from associates and joint ventures grew 5.3% organically, over half driven by strong mid-teens growth of our CRV partners in China. Net interest expenses value decreased by 1% to 522 million, reflecting a lower average net debt position and a lower average effective interest rate of 3.4%. Other net financing expenses improved by almost 18% to 199 million, due to lower losses from currency revaluations on outstanding foreign currency payables, especially in Nigeria, following our successful rights issue and subsequent balance sheet restructuring at the end of last year. Net profit increased by 4.9%, organically to 2.66 billion, which include an increase in income tax expenses and non-controlling interest. The effective tax rate buyer was 27.2% compared to 27.9% in 2024. The improvement mainly reflects changes in the profit mix. All in all, and factoring in the share count reduction from our share buyback, this resulted in a constant currency EPS buyer increase of 3.6% to €4.78. We will propose at the AGM of this year a dividend increase of 2.2 per share to €1.90. This equates to an equivalence amount of 1 billion and 46 million to be returned to shareholders through dividends. Finally, our net debt to EBITDA ratio was 2.2 at the end of the year, below the long-term target of below 2.5 times. When we consolidate FIFCO in 2026, we will see a moderate uplift and as per our policy, we'll aim to bring this back to below 2.5 target at pace. Let me now turn to the free operating cash flow. We generated 2.6 billion of free operating cash flow in 2025, a strong cash conversion of 87%, following last year's peak 103%. We are pleased with this performance. The year-on-year decrease of 456 million should be seen in conjunction with last year's strong working capital improvements, which contributed approximately 1 billion to our free operating cash flow for 2024. This year, we further improved working capital by over 300 million, with main working capital as a percentage of net revenue improving by almost 1%. Because the improvement is less than last year, the effect is negative, as shown in the 523 million adverse impact. CapEx amounted to 2.4 billion, representing 8.3% of net revenue value, in line with our guidance. Main investments related to our new Passos brewery in Brazil, our startups in the UK and in our digital backbone. Cash used for interest, dividends and income tax decreased in aggregate by 78 million. Let us now turn to our capital allocation priorities. As a reminder in our value creation model, we prioritize capital allocation towards organic growth. We do so with a disciplined financial framework with a prudent approach to debt. We remain committed to a long-term below 2.5x net debt to EBITDA ratio. We maintain a regular dividend policy as we've had for decades as an important and consistent source of shareholder returns. Going forward, we bring the dividend payout policy range to 30-50% of net profit before exceptional items and amortization of brands, so net profit buyer, compared with the prior range of 30-40%. We pursue value-enhancing acquisitions for long-term profitable growth. And with the FIFCO acquisition completed in January, we're excited to welcome the brands, the customers and the people to Heineken. Actively shaping the portfolio also means resolving or exiting operations where we see limited possibilities for sustained value creation. And as previously indicated, we consider returning excess capital via share buyback. This time last year we announced the 1.5 billion program and completed the first 750 million tranche last month. We will shortly announce the start of our second 750 million tranche. We outlined our Evergreen 2030 strategy last October at the Capital Markets Day in Seville. Let me now take a minute of how we accelerate execution in 2026. As Dove already mentioned, our priorities are clear, with growth as our number one priority. We are directing resources to strengthen our growth profile, staying close to consumers and customers. At the same time, we are increasingly leveraging our global scale to improve productivity and simplify how we operate. A key focus is on how we build and manage our brands. All our global brands, representing almost 40% of total volume, are now adapting the Heineken brand model, combining a pioneering spirit with a structured, repeatable way of building brands that support consistent execution and better value delivery. Ansel's progress over the last year demonstrates the impact this can have. We are also increasing the breadth and space of our innovation. In 2026, we will have around three times as many launches and pilots in our priority segments, which allows us to respond more effectively to changing consumer needs. Freddie AI will become a core enabler of our marketing and brand building processes. And by the end of 2026, most markets will be onboarded, representing close to 80% of our global marketing and selling investment. This will deepen consumer and customer relevance and enable excellent execution at speed and scale with improved ROIs over time. To fuel the growth and the profit, we are stepping up productivity initiatives and make changes to our operating model. We are moving to a simpler, leaner Heineken, centered on empowered operating companies. In selected regions, we are transitioning to multi-market operating companies, or MMOs. Four MMOs will already go live in Europe in the next six months. We're accelerating the leveraging of our global scale, including further expanding our global supply networks and enlarging the scope of Heineken business services. The transition to a single global digital backbone will further standardize data and processes, enabling automation and productivity. And we are moving to a smaller, more strategic head office. Concretely, we will streamline our supply chain through brewery digitization and selected closure. exit markets where we do not see a path to sustainable growth, and transition around 3,000 roles to Heineken Business Services to double its scale and broaden the services it provides. Across these initiatives, we expect a net reduction of between 5,000 and 6,000 roles over the next two years. Timelines will vary by market, and we will support impacted colleagues with care, respect and appropriate assistance. These actions are designed to deliver the 4 to 500 million of annual growth savings and allow us to continue investing in our brands and capabilities while supporting healthy operating profit growth. Now, then the outlook for 2026. We remain prudent on the macroeconomics and the consequent household spending in several markets. At this stage of the year, we do not expect the consumer environment to materially change. We anticipate operating profit to grow between 2 and 6% on an organic basis. As just highlighted, we accelerate the disciplined execution of Evergreen 2030 at pace, invest behind our growth and step up needed cost interventions. As such, we expect growth savings to be at the upper end of our medium term guidance range. In terms of variable cost, we expect a low single digit rise, primarily from currency effects on local inflation in Africa. The effective interest rates and the other net finance expenses are expected to be in line with 2025 and our effective tax rate to be in the range of 27 to 28%. And lastly, the completed acquisition of the FIFCO beverage and retail business is expected to be accretive to EPS in 2026. Now let's double click on the financials of FIFCO. As a reminder, we acquired the business at 11.6 times EV EBITDA multiple for a 3.2 billion cash consideration. This means that our net debt to EBITDA ratio will increase moderately and expect to be back below 2.5 times by 2027. At the time of the deal announcement in September, we gave you the 24 financials. The 25 financials do not differ materially. Net revenue of $1.15 billion and an operating profit of $276 million. These figures are of course based on the local accounting policies. The integration team will now start to align reporting with the Heineken accounting policies. And like I said earlier, we closed the transaction on the 30th of January. For the 11th month period, we expect FIFCO to be circa 2% to 3% accretive to EPS in 2026. To summarize for 2025, we achieved a well-balanced performance in challenging market conditions. In the growth pillar, we delivered revenue growth consisting of quality volume with solid market share gains. In the productivity pillar, our team realized another year of strong growth savings, the key driver of the operating margin expansion. We are pleased with the progress on capital efficiency, with solid cash flow and an improving ROIC. And for 2026, in a similar market context as 2025, we accelerate the execution of Evergreen 2030. putting our growth strategy in place, and taking bold productivity measures to unlock investment space and enable profit expansion. We expect operating profit buyer to grow in the 2% to 6% range. Thanks for listening, and now over to you for questions.