Heineken will publish its 3Q12 trading update on Wednesday 24 October before market.
We remind that consolidated beer volume grew by 2.8% organically in 1H12, while revenue increased by 4.5% organically with revenue per hl growth of 2.9%. EBIT (beia) declined by 5.5% organically in 1H12, while net profit (beia) was down 4.0% organically.
Heineken did not issue a specific 3Q guidance but targets net profit (beia) to be flat organically on a full year basis, implying a return to net profit (beia) growth in the second half of the year.
We forecast 3Q12 consolidated beer volumes to grow by 1.7% to 45.6m hl (consensus 46.5m hl), broken down as follows :
- Western Europe: -2.5% to 12.4m hl (css 12.7m)
- CEE +3.0% to 14.2m hl (css 14.4m)
- Africa & Middle East: +3.5% to 5.4m hl (css 5.6m)
- Americas: +3.5% to 13.2m hl (css 13.3m)
- Asia Pacific : +5.0% to 0.4m hl (css 0.4m).
On the back of accelerating revenue per hl growth we expect 3Q revenue to grow by 5.2% to € 4,887m (css € 4,948m).
We assume that the fairly good summer weather in some key regions and the gradual benefits from costs savings on the back of the Total Cost Management 2 Program (€ 500m target by 2014, € 85m savings in 1H12) implementation mean that Heineken will stick to its FY net profit (beia) guidance. We continue to believe Heineken is too undervalued vs other large brewing peers like AB InBev and SABMiller while the geo-mix is gradually improving towards emerging markets (acquisition of F&N’s APB stake expected to close in November), and we stick to our BUY rating and € 57 target price.