Heineken Nv · EURONEXT:HEIA
Heineken Nv — Investor Presentation (February 2022)
73 slides from Heineken Nv's investor presentation, February 2022
Slide 1: Investor Presentation
INVESTOR PRESENTATION Last Updated: February 2022 1
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements with regard to the financial position and results of HEINEKEN’s activities. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forwar
Slide 3: Contents
Contents Group Overview Our Strategy - EverGreen Supporting Information Brew a Better World Targets, Strategy & Progress Latest Results & Outlook Leverage & Financial Policy Our Markets Governance, Ownership & Shareholder Information 3
Slide 4: Investment case: HEINEKEN - The Most International Brewer
Investment case: HEINEKEN - The Most International Brewer We brew the Joy of True Togetherness to inspire a better world HEINEKEN balanced growth algorithm • CONSUMERS and CUSTOMERS at its core • Progressing towards a NET • Proud >150 YEAR OLD heritage as a ZERO, HEALTHIER and FAIRER Superior & WORL
Slide 5: At a Glance
At a Glance1 "We delivered a strong set of results in 2021 in a challenging and fast-changing environment. I am proud of how our colleagues, customers, and suppliers continued to adapt, support one another, and deliver these results. 56.9 #1 #2 We made a big step towards recovering to pre-pandemic l
Slide 6: Track record of delivering superior growth
Track record of delivering superior growth Revenue OG avg 2015-20191 HEINEKEN 5.0% +3.1% Beer Volume OG (avg 2015-2019) Other brewers 3.9% Spirits 3.9% +5.0% Net Revenue OG (avg 2015-2019) Food 3.3% Soft Drinks 2.6% +7.3% Operating Profit OG (avg 2015-2019) ¹Other brewers (ABI, CARLB, STZ & TAP); Sp
Slide 7: Diversified global footprint geared for growth
Consolidated Beer Volume (mhl)1 Diversified global footprint geared for growth 17% 33% 231 mhl Operating Companies 37% 13% Joint Ventures / Associates Licences Export Operating Profit (beia; €m) 1 12% 33% €3,414m 34% Significant deals 21% AMEE Americas APAC Europe 7 ¹Data refers to FY2021 results &
Slide 8: Heineken®: The most international beer brand
Heineken®: The most international beer brand KEY FACTS Heineken® volume in 2021 # markets in which +17.4% >190 Heineken® is sold as the most international beer brand Heineken® volume as % Heineken® Silver more than doubled its volume and will reach c.20% of total volume over 25 markets by 2022 # mar
Slide 9: Winning portfolio and strong track record in building new categories
Winning portfolio and strong track record in building new categories KEY FACTS >300 Brands >40% Revenues from PREMIUM LONO volume as % of total volume winning in c.6% traditional soft drink occasions CIDER as % of total volume offering an Top premium beer portfolio c.2% opportunity to leverage exist
Slide 10: Contents
Contents Group Overview Our Strategy - EverGreen Supporting Information Brew a Better World Targets, Strategy & Progress Latest Results & Outlook Leverage & Financial Policy Our Markets Governance, Ownership & Shareholder Information 10
Slide 11: HEINEKEN EverGreen growth algorithm
HEINEKEN EverGreen growth algorithm Our Dream is to shape the future of Beer & Beyond to win the hearts of Consumers Superior & balanced growth Our unique strengths Raise the bar on Long-term value creation & opportunities Accelerated Sustainability & Continuous investments Responsibility and produc
Slide 12: Our ambition is to deliver balanced, superior top-line growth
Our ambition is to deliver balanced, superior top-line growth, winning with consumers and customers Portfolio Route to consumer Footprint Drive premiumisation Pioneer choice in low Intentionally expand Shape and Strengthen in key at scale, led by and non-alcoholic beyond beer strengthen our route pr
Slide 13: Drive premiumisation at scale led by Heineken®
Drive premiumisation at scale led by Heineken® Heineken® International brands Local premium champions Win value share, everywhere Scale and replicate success Fewer, bigger bets 13
Slide 14: Pioneer choice in low and non-alcoholic beverages
Pioneer choice in low and non-alcoholic beverages Make 0.0% Significant 0.0 beer available Make 0.0% beer available everywhere, everywhere, always opportunity always 5.2x Scale Heineken® 0.0 leadership Non-alcoholic beer long term volume growth potential1 Extend 0.0 options across entire portfolio ¹
Slide 15: Intentionally expand Beyond Beer
Intentionally expand Beyond Beer Significant opportunity Blurring New consumer Expand beer to new Move beyond beer to serve beverage landscape segments & occasions consumer needs & occasions consumers better Women, affluent, older and young generation 5.5x 1.2x Expand leadership in Cider Step-up to
Slide 16: Shape and strengthen our route to consumer digitally
Shape and strengthen our route to consumer digitally Become the best-connected brewer 1 Digitally connect all our customers via Distributors / Wholesalers Channels Consumers B2B, with €10Bn revenue in 2025 (2021: €2.8bn) 1 2 2 Full sales force digitally empowered by 2023 Digitally Modern Trade eReta
Slide 17: Strengthen in key profit pools through Expansion & Acquisition
Strengthen in key profit pools through Expansion & Acquisition Strengthen our #1 and #2 positions Obtained control of UBL in India 2019 Colombia Announced intent to acquire Distell and NBL in Southern Africa 2019 Ecuador 2014 Ethiopia Greenfield expansion into new 2015 Myanmar growth markets 2020 Pe
Slide 18: Fund the growth: starting with €2bn in gross savings initiatives
Fund the growth Building one company-wide productivity management system Starting with €2bn in gross savings initiatives Digitalisation Mitigating cumulative inflation Organisational and transactional FX Process redesign standardisation Productivity initiative funnel Re-investing in growth: Footprin
Slide 19: Three key productivity areas to deliver the €2bn gross savings
Three key productivity areas to deliver the €2bn gross savings Three-year programme: implemented over 2021-2023 Organisational redesign COGS efficiency Commercial effectiveness ~8,000 FTE impacted Complexity reduction (SKUs) Digital-enabled sales excellence direct personnel €350m cost savings1 Conve
Slide 20: On track to deliver: €1.3bn gross savings 2021 vs 2019
On track to deliver: €1.3bn gross savings 2021 vs 2019, over 7,500 initiatives The program has global coverage… … implemented across all cost areas EUROPE c.8% €0.4bn gross savings Selling & Marketing c.21% c.50% Total Gross Personnel AMERICAS HEADOFFICE APAC €0.4bn gross savings Var Expenses Saving
Slide 21: Accelerate our investments and make them work harder
Accelerate our investments and make them work harder Marketing & Sales Digital & Technology Sustainability & Responsibility Restore 2019 spend % by 2023 Front-load investments to accelerate Raise the bar and enable faster progress Fully reinvest commercial productivity transformation & build a futur
Slide 22: Sharper and more deliberate marketing and sales spend allocation
Sharper and more deliberate marketing and sales spend allocation Optimise spend within OpCos and release the potential of LOCAL PREMIUM CHAMPIONS Europe example ~25 60 BRANDS SELECTED DEPRIORITIZED BRANDS local Champions Premium +61% Broadly appealing brands with volume growth vs 2019 AUTHENTIC mean
Slide 23: Disciplined use of capital
Disciplined use of capital 1 Improve operating capital efficiency and cash flow conversion 2 Rigorous financial discipline towards investments 3 Committed to Net Debt to EBITDA ratio <2.5 4 Sustain healthy dividend pay-out of 30-40% of Net Profit (beia) 23
Slide 24: Raise the bar on Sustainability & Responsibility
Raise the bar on Sustainability & Responsibility With newly launched Brew a Better World 2030 ambitions Path to Zero Impact Path to Inclusive, Fair & Path to Moderation Equitable Company & World and no Harmful Use Carbon Inclusion & Diversity Always a Choice Water Fairness & Safety Address Harmful U
Slide 25: Unlock the full potential of our people
Unlock the full potential of our people Strengthen our Winning culture Boost Organisational Capabilities Unleash our Diverse Talent High speed and agility Inclusion & diversity Disciplined entrepreneurship Consumer & external orientation Strong local talent pipeline Common ways of working Cost consc
Slide 26: Phasing
Phasing 2020-2021 2022 - 2023 2024 and beyond Mitigate Recover & Build Grow & Expand Growth Pandemic revenue impact Post pandemic top-line recovery Superior growth Productivity Short-term mitigation €2bn productivity programme Operating leverage Cost-conscious culture Investments Reduce all discreti
Slide 27: On track to deliver on our long-term goals
On track to deliver on our long-term goals Deliver SUPERIOR TOP-LINE GROWTH ACCELERATED INVESTMENT to meet fast-changing consumer and customer needs Growth STEP UP capital efficiency Net debt / EBITDA ratio <2.5 30-40% dividend pay-out ratio Capital Profitability efficiency Deliver €2BN COST SAVINGS
Slide 28: Contents
Contents Group Overview Our Strategy - EverGreen Supporting Information Brew a Better World Targets, Strategy & Progress Latest Results & Outlook Leverage & Financial Policy Our Markets Governance, Ownership & Shareholder Information 28
Slide 29: Brew a Better World 2030
Brew a Better World 2030 Path to zero impact Path to an inclusive, fair and equitable world Path to moderation and no harmful use
Slide 30: Brew a Better World 2030 ambitions
ENVIRONMENTAL Reach carbon neutrality SOCIAL Embrace inclusion & diversity RESPONSIBLE Always a choice = Net zero emissions in production by 2030 = Carbon neutral value chain by 2040, 30% absolute reduction by 2030 = 100% sustainable ingredients (hops, barley) by 2030 Maximise circularity = Zero was
Slide 31: Environmental
ENVIRONMENTAL Base year 2021 2023 2025 2030 2040 Reach 2019 • Net zero emissions in • Carbon neutral • Total carbon emissions production across the value carbon across value chain: chain(1) • 30% reduction in neutrality 19.8 CO2-e MT emissions across the 69.9 CO2-e kg/hl value chain(1) 2020 • 100% s
Slide 32: Social
SOCIAL 2020 (Base year) 2023 2025 2030 Embrace • 23% women represented • At least 65% of country • 30% women represented • 40% women represented inclusion & diversity in senior management leadership teams to be in senior management in senior management regional nationals • 100% of management trained
Slide 33: Responsible
RESPONSIBLE 2020 (Base year) 2023 2030 Always a choice • Heineken® 0.0 available in 84 • A zero alcohol option for 2 markets; over 130 non-alcoholic strategic brands in majority of our line extensions of brands available markets (accounting for 90% of our business) • 89% of products included informa
Slide 34: More information on Brew a Better World
More information on Brew a Better World Brew a Better World Strategy Our Policies relating to Brew a Better World Upholding our values means being crystal clear about how we do business and how we conduct ourselves as individuals. Our Code of Business Conduct and its underlying policies are at the h
Slide 35: Contents
Contents Group Overview Our Strategy - EverGreen Supporting Information Brew a Better World Targets, Strategy & Progress Latest Results & Outlook Leverage & Financial Policy Our Markets Governance, Ownership & Shareholder Information 35
Slide 36: FY 2021 Highlights
FY 2021 Highlights Net Revenue (beia) OG Net Revenue (beia) OG per hl +12.2% +8.3% Consolidated Beer Volume OG Heineken® Volume +4.6% +17.4% Operating Profit (beia) OG Operating Profit Margin (beia) +43.8% 15.6% (+331bps) Net Profit (beia) OG Diluted EPS (beia) EUR +80.2% 3.54 36 36
Slide 37: Double-digit growth from partial volume recovery and assertive pricing
Double-digit growth from partial volume recovery and assertive pricing Net Revenue (beia): +12.2% organic increase Organic increase €2,412m 2.6% 1.4% €m 21,901 19,724 +3.6% +8.3% Volume OG Net rev/hl OG FY 2020 Total volume Net rev/hl Currency Consolidation FY 2021 Net revenue translation impact Net
Slide 38: Strong profit growth delivery versus 2020
Strong profit growth delivery versus 2020 Operating Profit (beia): +43.8% organic increase 98 31 1,060 3,414 2,421 FY 2020 Organic growth Currency Consolidation FY 2021 Operating translation impact Operating profit (beia) profit (beia) 38
Slide 39: Other key financial metrics
Other key financial metrics €m unless otherwise stated - Beia FY 2021 FY 2020 vs LY¹ Operating Profit 3,414 2,421 +43.8% Share of Profit 237 147 +70.0% Net Interest Income & Expenses -403 -470 +12.5% Other Net Finance Income & Expenses -94 -146 +22.2% Net Profit 2,041 1,154 +80.2% ETR 29.9% 32.8% -2
Slide 40: FOCF delivery vs 2020
FOCF delivery vs 2020 €m 84 43 150 978 €m 2,514 1,513 FY 2020 Cash flow from Working capital Capex 2 Interest, dividend FY 2021 FOCF operations1 & income tax FOCF ¹ Cash flow from operations before changes in working capital and after provisions and post-retirement obligations ² Cash flow (used in/)
Slide 41: Outlook 2022
Outlook 2022 EverGreen strategy on-track. Current fast-changing external circumstances require constant navigation between long- term transformation and short-term financial delivery. Uncertain environment remains in 2022, with continued impact of COVID-19. Input costs per hectoliter will increase i
Slide 42: Contents
Contents Group Overview Our Strategy - EverGreen Supporting Information Brew a Better World Targets, Strategy & Progress Latest Results & Outlook Leverage & Financial Policy Our Markets Governance, Ownership & Shareholder Information 42
Slide 43: Overview of HEINEKEN financial debt position
Overview of HEINEKEN Overview of financial debt position financial debt portfolio as of 31 December 2021 Total Interest Bearing Debt1 of €16.9 billion Funding Sources • Euro Medium Term Note program of €20 billion listed on Luxembourg stock exchange • USD 3.7 billion of outstanding 144a notes issued
Slide 44: HEINEKEN aims to sustain a strong capital base
HEINEKEN aims to sustain Committed to long term target <2.5x a strong capital base Committed to a long-term target Net debt/EBITDA) ratio below 2.5x Net Debt/EBITDA (beia) Net Debt/EBITDA (beia) A conservative financial profile over the longer term with strong focus on cash flow generation and wor
Slide 45: A well-balanced bond maturity profile
AA well-balanced bond maturity well-balanced bond maturity profile profile Optimise debt repayments via well balanced maturity profile Bond maturity profile per 31 December 2021 (in €m) incl. the currency effect of cross-currency interest rate swaps In 2021, no new Notes were issued under Euro Med
Slide 46: Conservative risk management policy
Conservative risk management policy In both currencies and interest rates Currency split of Net Debt (per 31 Dec 2021) HEINEKEN hedges up to 90% of its net US dollar cash flows on the basis of rolling forecasts, for a period of up to 18 months Approximately 100% of average net debt is at fixed r
Slide 47: Solid Investment Grade Ratings
Solid Investment Grade Ratings Solid Rated Investment by Moody’s and S&PGrade Ratings since 2012 Rated by Moody’s and S&P since 2012 Baa1 / stable outlook (16 July 2021) BBB+ / negative outlook (2 December 2021) “A solid business profile, supported by strong market position “No. 1 & 2 in various
Slide 48: Contents
Contents Group Overview Our Strategy - EverGreen Supporting Information Brew a Better World Targets, Strategy & Progress Latest Results & Outlook Leverage & Financial Policy Our Markets Governance, Ownership & Shareholder Information 48
Slide 49: HEINEKEN Group
HEINEKEN Group 70+ Countries Consolidated Beer Net Revenue Operating Profit (beia) Volume (mhl) (€m) €m 160+ Breweries 17% 14% 12% 300+ 33% 33% Brands 42% 231 21,901 3,414 32% 34% >80,000 Direct Employees 37% 13% 12% 21% 53% Group Operating Profit from developing markets AMEE Americas APAC Europe So
Slide 50: AMEE Region
AMEE Region % Contribution to Group in 2021 Total Consolidated Vol (mhl) Net Revenue Beia (€m) 49.9 50.3 3,370 3,159 47.9 45.4 3,051 2,782 12% 17% 14% Operating Beer Volume Net Revenue Profit Key Markets 2018 2019 2020 2021 2018 2019 2020 2021 # market position Operating Profit Beia (€m) Operating M
Slide 51: AMEE Region – FY2021
“Africa is the next frontier of growth AMEE Region – FY2021 and after a challenging 2020, we’ve seen markets bounce back stronger Net Revenue (beia) OG Operating Profit (beia) OG and faster than predicted. We gave a vote of confidence to the long- +25.9% +89.0% term prospects of Southern Africa with
Slide 52: Nigerian Breweries
Nigerian Breweries Key Facts Comprehensive brand portfolio 9 breweries and 2 malting plants #1 or #2 brands in all segments Segment Core brands The Nigerian beer market remains International premium attractive given its high growth potential and an improving Kudenda Malting Plant macroeconomic envir
Slide 53: Intention to acquire Distell and Namibian Breweries
Intention to acquire Distell and Namibian Breweries Important growth and value creation opportunity Newco will be a top 5 operating company for HEINEKEN EPS (beia) accretive within the first-year post completion Expected to be margin accretive in the medium-term, on realisation of identified r
Slide 54: Americas Region
Americas Region % Contribution to Group in 2021 Total Consolidated Vol (mhl) Net Revenue Beia (€m) 94.7 93.6 86.0 89.4 6,781 7,429 7,226 34% 6,319 37% 32% Operating Beer Volume Net Revenue Profit Key Markets 2018 2019 2020 2021 2018 2019 2020 2021 Operating Profit Beia (€m) Operating Margin Beia (%)
Slide 55: Americas Region – FY2021
Americas Region – FY2021 “We keep investing in our key Net Revenue (beia) OG Operating Profit (beia) OG markets in the region and expanded into new markets. We continue to +17.9% +19.5% innovate with brands and products meeting changing consumer Price Mix demands, driving growth with our Beer Volume
Slide 56: HEINEKEN Mexico
HEINEKEN Mexico Key Facts Comprehensive portfolio 7 Breweries #2 Position Segment Core brands • HEINEKEN’s largest beer operation with positive underlying market fundamentals, including population growth, urbanisation, Premium growing middle class, etc Affordable-Premium • Premium presents significa
Slide 57: HEINEKEN Brazil
HEINEKEN Brazil Key Facts Strong portfolio 15 breweries; c.20% Market share; #2 Position in market Segment Core brands • Heineken® is most loved brand in Brazil Premium and • Focused on growing mainstream and Super Premium premium portfolios (especially in the North/North East), whilst value brands
Slide 58: HEINEKEN USA
HEINEKEN USA USA is largely an import market for HEINEKEN Key Facts Strong portfolio 9 Distribution Centres 8 Offices Segment Core brands #2 Premium Position Premium & White Plains HQ Super Premium Mainstream Source: Global data, Company data - 2018 58
Slide 59: APAC Region
APAC Region % Contribution to Group in 2021 Total Consolidated Vol (mhl) Net Revenue Beia (€m) 29.7 31.8 28.7 30.4 2,919 3,205 2,764 21% 2,707 13% 12% Operating Beer Volume Net Revenue Profit Key Markets 2018 2019 2020 2021 2018 2019 2020 2021 # market position Operating Profit Beia (€m) Operating M
Slide 60: APAC Region – FY2021
“After a strong performance in the first half of the year, our region was APAC Region – FY2021 significantly impacted by the hardest COVID-19 wave yet. We Net Revenue (beia) OG Operating Profit (beia) OG implemented a robust pricing and cost management programme to -6.1% -13.5% continue to support b
Slide 61: HEINEKEN Vietnam
HEINEKEN Vietnam Market leadership in a very favourable beer market and opportunity to further expand into rural areas and the North Key Facts Strong portfolio 6 Breweries Segment Core brands #2 Position #1 position in premium segment Premium Mainstream & Economy Source: Global data, Company data 61
Slide 62: United Breweries Limited
United Breweries Limited Key Facts Strong portfolio 21 Breweries 12 contract breweries Segment Core brands #1 Market position • HEINEKEN’s stake in UBL 61.5% • India beer PCC is slightly above 2L • Strict regulations on the production, transportation, Super Premium distribution, promotion, pricing a
Slide 63: China Resources Beer Holdings
China Resources Beer Holdings Key Facts Strategic collaboration 70 Breweries • HEINEKEN’s stake in CR Beer 20.6% Present in 25 out of 34 regions in • PCC c.30l, with signficant growth potential China (predominantly in Premium) #1 Market position • Snow, No. 1 beer brand by volume in the world • Mark
Slide 64: Europe Region
Europe Region % Contribution to Group in 2021 Total Consolidated Vol (mhl) Net Revenue Beia (€m) 98.6 99.7 10,348 10,629 9,494 33% 88.8 91.8 8,631 33% 42% Operating Beer Volume Net Revenue Profit Key Markets 2018 2019 2020 2021 2018 2019 2020 2021 # market position Operating Profit Beia (€m) Operati
Slide 65: Europe Region – FY2021
“Our European business continued to show great resilience in 2021 Europe Region – FY2021 with volumes nearly returning to pre-COVID levels despite prolonged Net Revenue (beia) OG Operating Profit (beia) OG volatility across markets. We saw excellent execution of key priorities, +8.6% +154.1% includi
Slide 66: Wholesale strategically important in selected markets
Wholesale strategically important in selected markets Key Facts Business model Our Wholesale business is the largest Off Trade physical marketplace in Europe Wholesale operations focused on on- Brewery trade service and particularly draught On Trade Providing synergies with commercial brewing
Slide 67: Star Pubs & Bars
Star Pubs & Bars A highly successful & profitable Strategically important business model to the UK business >2,500 leased and tenanted pubs since Punch Hands-on experience & understanding of the On Trade acquisition with a wide UK footprint Unique consumer touchpoints Star Pubs & Bars strong
Slide 68: Contents
Contents Group Overview Our Strategy - EverGreen Supporting Information Brew a Better World Targets, Strategy & Progress Latest Results & Outlook Leverage & Financial Policy Our Markets Governance, Ownership & Shareholder Information 68
Slide 69: Renewed Executive Team
Renewed Executive Team Dolf van den Brink Harold van den Broek Chief Executive Officer & Chief Financial Officer & Chairman of the Executive Board Member of the Executive Board ET member since: April 2018 ET member since: June 2021 Years in company: 23 Years in company: - Marc Busain Roland Pirmez J
Slide 70: Ownership Structure
Ownership Structure Heineken N.V. shares held by Heineken Holding N.V. equals the number of shares issued by Heineken Holding N.V. FEMSA L’Arche Green N.V. Public 52.599% 12.262% HEINEKEN Holding N.V. 35.139% Board of directors Public 50.005% 8.632% HEINEKEN N.V. 41.363% Supervisory board Executive
Slide 71: Sponsored Level 1 ADR Programmes
Sponsored Level 1 ADR Programmes Heineken N.V. Heineken Holding N.V. Bloomberg ticker: HEINY Bloomberg ticker: HKHHY ISIN: US4230123014 ISIN: US4230081014 Cusip: 423012301 Cusip: 423008101 Exchange: OTCQX Exchange: OTCQX Ratio: 2 ADRs: 1 Ordinary Share Ratio: 2 ADRs: 1 Ordinary Share Depositary bank
Slide 72: Contact Us
Contact Us E-mail: investors@heineken.com Tel: +31-20-5239590 Federico Castillo Anna Nawrocka Investor Relations Director Investor Relations Analyst Robin Achten Mirjam Koersen Investor Relations Analyst Investor Relations Specialist 72
Slide 73: HEINEKEN
HEINEKEN