Vietnam's inventories are now normalizing, which should support a volume recovery. Having analyzed the H1 2023 reports, we see that almost 50% of the volume decline was driven by Vietnam and Nigeria, and excluding this market performance, Heineken's volume decline was set only at a low-single-digit. ![]() Today, we are not focusing on the numbers but looking deeper into Heineken's business performance. Going down to the P&L, the company's operating profit decreased by 22.2% with a net profit deceleration of only minus 8.6% thanks to lower tax payments and dividends from non-controlling interest. Looking at the numbers, Heineken's net revenue increased by 6.6%, with volume down by 5.6%. Despite that, we still see risk/reward skewed on the upside here at the Lab. Heineken's stock price was down by 8%, with implied consensus earnings per share cut of approximately minus 4%. The company disappointed Wall Street with H1 financial figures and lower guidance (both below estimates). Our buy target was based on 1) Heineken beer premiumization (at scale) with a well-balanced price MIX development, 2) higher pricing power with >10% core operating profit growth until 2025, 3) a margin recovery story combined with volume uplift (EPS > EBIT thanks also to EM exposure and higher contribution from associates), and 4) a compelling valuation vs the Consumer Staple market. In numbers, the company stock price appreciated by 18% (including the dividend payment). Here at the Lab, since our initiation of coverage titled ' Heineken Might Benefit From This Difficult Momentum ' released last year, we are still up with our investment. In addition, we also reported net income growth more skewed to H2 with an easing in marketing expenditure and lower raw material inflationary cost pressures. Looking back, we anticipated " incremental negative development in Nigeria and Vietnam" partially " offset by better-than-expected output in the EU and solid performance in Mexico and Brazil." We forecasted a volume decline of minus 1.5% in Q2 with more challenges ahead. Bill G ates Loves Beer, And Heineken Is Still A Buy.This year, we already follow up on the beer giant twice, and we suggest our reader check our past analysis: ![]() It was not a positive quarter for Heineken ( OTCQX:HEINY), and today, we would like to recap our previous publication before commenting on the company's Q2 financial results. Pjohnson1/iStock Unreleased via Getty Images
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