Analysis

Heineken goes from strength to strength - Analysis

Most popular

What will be Ian Curle's Edrington legacy?

'Healthy alcohol - the trend to watch in 2019?

The beer category in 2019 - just-drinks predicts

Is craft spirits approaching a reset moment?

MORE

In full-year 2016 numbers, released yesterday, Heineken reported a near-5% lift in organic sales. As currency headwinds reduced sales growth in reported terms to a less impressive 1.4%, CEO Jean-François van Boxmeer flagged "more challenging economic conditions in some developing markets and significant currency pressures" in the year.

Analysts believe Heineken has a stronger emerging market presence relative to the other global brewers

Analysts believe Heineken has a stronger emerging market presence relative to the other global brewers

Van Boxmeer maintained, however, that the group had "delivered strong results in 2016". 

In the notes that followed Heineken's announcement, several analysts also use the word 'strong' to illustrate performance. Not only that, but many suggest Heineken is still gathering strength.

"After a period of relative share price under-performance, we believe the stock has reached a turning point," writes Barclays analyst Simon Hales. "The strong FY-2016 results - and management's confidence that it will deliver another year of c.40bps of EBIT margin expansion - should be enough to refocus the investor debate away from short-term trading metrics and back to the core structural longer-term attractions of the Heineken group."

The margin expansion target is also highlighted by Societe Generale analyst Andrew Holland, who believes that management's retention of the target has "confounded doubters" and shows "confidence in the ability of Mexico and Vietnam to offset FX-driven pressure in Nigeria".

Meanwhile, at Bernstein, analyst Trevor Stirling describes Heineken's confidence, in spite of numerous headwinds, as being "quietly impressive". The brewer's "ambition and drive for performance and efficiency" underlines its "transformation from 'The Sick Man of Europe' to (the second-biggest) 'Global Brewing Powerhouse'", he writes

Digging into the numbers, the Bernstein analyst hails a "third consecutive solid year" for the brewer, from an operating perspective. "Organic revenues grew c.5%, their best performance for a number of years, and at the top-end of global staples," he notes. "Combined with margin expansion of 54bps, Heineken delivered c.10% organic EBIT growth in FY-2016."

On a regional basis, Barclays' Hales believes that Heineken's emerging market-skewed footprint (accounting for 57% of group sales) means "its natural volume growth trajectory at +1.4% is now better than Anheuser-Busch InBev and Carlsberg".

Over at Stifel, analyst Mark Swartzberg re-iterates a 'buy' rating for the brewer's shares, describing the company as "motoring".

He outlines strong performances across three challenging areas:

  • Competitive regions - "Two years in a row of positive Western Europe beer volumes"
  • Higher-share emerging markets - "High-single-digit 2016 volume growth in Mexico, double-digit in Vietnam"
  • More difficult lower-share emerging markets - "Up low-single-digits in China, down low-single-digits in Brazil, though Heineken lager up double-digits".

Overall, the analyst community appears buoyed by Heineken's 2016, and sounds unanimously confident about its future.

Bring on 2017, then.

Heineken Full-Year 2016 results - Click here for the full round-up of just-drinks' coverage


Sectors: Beer & cider, Company results

Companies: Heineken

Related Content

Heineken's synergies, premiumisation designs in Brazil - Analysis

Heineken's synergies, premiumisation designs in Brazil - Analysis...

Anheuser-Busch InBev's Budweiser entrance puts Heineken on alert in Nigeria - CEO

Anheuser-Busch InBev's Budweiser entrance puts Heineken on alert in Nigeria - CEO...

Heineken's H1 shine dulled by FX, acquisition headaches - Analysis

Heineken's H1 shine dulled by FX, acquisition headaches - Analysis...

Can Bai still deliver for Dr Pepper Snapple Group? - Analysis

Can Bai still deliver for Dr Pepper Snapple Group? - Analysis...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?