Heineken prospects remain solid despite short-term troubles, according to Bernstein

Heineken prospects remain solid despite short-term troubles, according to Bernstein

Heineken’s exposure in Africa, South-East Asia and Mexico means the group’s medium- to long-term prospects are still strong despite a tough start to 2013, according to an analyst. 

In a note to clients earlier today (9 July) Bernstein analyst Trevor Stirling said he expects the Dutch group’s H1 numbers to be weak. It follows a drop in group volumes in first-quarter results

But Stirling said Heineken’s Q1 performance is likely to be the “nadir” of its near-term fortunes.

“We remain positive about Heineken's medium-/ long-term prospects ... with more exposure to Africa, excluding South Africa, than SABMiller, high exposure to emerging South-East Asia, and a good growth platform in Latin America, notably in Mexico,” the analyst said.

He also flagged that Heineken is set to benefit from lower input costs this year. This is due to “an expected very strong harvest in West Europe and Russia, low global wheat prices and aluminium prices that are well down on this time last year,” Stirling said.

“So long as Heineken and the other brewers do not re-invest this potential margin upside in price promotion, there could be further upside,” he added.

The brewer last year completed a SGD5.4bn (US$4.3bn) deal to take full control of Tiger brewer Asia Pacific Breweries.