17
Fund the growth, fuel the profit
Cost management to enable growth
Fuel the profit of the future
V.? 1
Introduction
Sustainability
Review
Other
Information
Financial
Statements
Report
of the
Supervisory
Board
Report
of the
Executive
Board
Our growth algorithm seeks to deliver superior, balanced
growth enabled by investments in innovation, in brand
power, behind our digital transformation, in new
capabilities and in making our business more
sustainable. To fund this, we are structurally driving
productivity across all parts of our business.
2023 marked the fourth year of our productivity
programme. We delivered €0.8 billion in gross savings
this year, reaching a cumulative 2.5 billion gross
savings versus the cost base of 2019, significantly
ahead of our initial €2 billion commitment.
In Europe, our supply chain transformation
programme progressed ahead of schedule. It
delivered in excess of €200 million in gross savings
from portfolio and data-driven efficiency gains in
production, purchasing and logistics.
Outside of Europe, we accelerated procurement
initiatives across the group. Major projects in the
Americas including near shoring production capabilities
and more sustainable local sourcing solutions
contributed more than €240 million. For example, by
working with our strategic suppliers in Brazil to bring
dedicated furnaces online for our local glass bottle
demand we have eliminated the need for imports.
Our efforts also involved leveraging technology to
drive productivity across the organisation, like the
aforementioned example of AIDDA in Mexico to
improve sales force productivity and the increase
use of shared service centres.
We now have established a practice of continued cost
and productivity management in our organisation,
and have begun to build the foundations of stronger
Operating profit landed at €3.2 billion (2022: €4.3
billion), lower due to higher exceptional items and
amortisation of acquisition related intangibles in 2023
amounting to €1.2 billion (2022: €219 million), of
which amortisation of acquisition-related intangibles
represented €385 million (2022: €333 million) and net
exceptional expense items amounted to €829 million
(2022: €114 million net benefit), including an
impairment of €491 million for Heineken Beverages.
Operating profit (beia) grew organically 1.7% with a
strong recovery in the second half of the year and with
growth delivered in three of the four regions. Pricing to
offset inflation and premiumisation, together with
strong delivery of our productivity programme, more
than offset the inflationary pressures in our cost base
and incremental investments behind our growth
agenda. Currency translation negatively impacted
operating profit (beia) by €102 million, or 2.3%,
mainly driven by the devaluation of currencies in
emerging markets being partially offset by
appreciation of the Mexican Peso.
Net profit was €2.3 billion (2022: €2.7 billion). The
negative impact of exceptional items and amortisation
of acquisition related intangibles on net profit in 2023
was €329 million (2022: €155 million), where the
higher exceptional expenses in operating profit were
partially offset by the exceptional benefits from the
recognition of €661 million of previously unrecognised
deferred tax assets in Brazil. Net profit (beia) declined
4.3% organically to €2.6 billion (2022: €2.8 billion). The
gains from higher operating profit, higher profits from
associates and joint ventures and lower minority
interests and income taxes were more than offset by a
significant increase in other net financing expenses and
higher-interest expenses.
For more details, please refer to the
Financial Review
Heineken
N.V.
Annual
Report
2023
confident to deliver on our €400 million gross savings
ambition for the next years.
-I Oi - 1
