Analysis - Developed markets good, but Brazil, India, China bad for Beam Inc
Over 50% of Beam Inc's EBITDA comes from the US
While the developed markets of the 'west' are still proving fruitful for Beam Inc, many of the major emerging markets are set to drag on the company's performance this year, an analyst has warned.
Yesterday (2 May), the US-based spirits firm posted a healthy set of Q1 figures, with net profits jumping by 22.6% on an 8.2% lift in net sales. Sales in North America rose by 7%, while the Asia Pacific & South America unit saw sales fall by 7%.
In a note released this morning, analyst Nomura said that Beam can expect its healthy performances in North America and Western Europe to continue, going forward. "North America remains robust (while) Western Europe shows better momentum," the company said. "(In North America), Beam continues to expect to outperform the market (now estimated with circa 4% revenue growth versus previous 3% to 4%), driven mainly by the Bourbon category with further upside from innovation."
However, Beam's Q1 numbers from three of the BRIC markets did not perform quite so well. "Although the emerging markets together grew by double digits, some of its key markets like Brazil and China are now showing more normalised growth rates," Nomura said. "This does not come as a surprise as Remy Cointreau and Pernod Ricard both had already flagged a subdued Chinese New Year versus the previous year.
"The Asia Pacific South America division saw revenue decline by 7%, of which India contributed -6%," Nomura continued. "India will be a drag through into Q3, owing to the internal audit investigation."
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