We finetuned our earnings model by incorporating Grupo Modelo as of closing of the transaction (early June vs our previous assumption of 1 July) and by slightly lowering our forecasts for the group ex-Modelo operations.
Below we discuss the key changes to our model:
Volumes:we lower our FY13 organic volume performance assumption by about 1%, meaning that we now forecast a FY13 organic volume decline of about 1%. Recall that the company posted a 4.1% organic volume decline in 1Q13 –we now forecast a 2.3% organic decline in 2Q13, a 0.2% organic growth in 3Q13 and a 1.5% organic growth in 4Q13. Including an additional approximate 4 weeks of Modelo vs our previous scenario means that our FY13 group volume forecast is broadly unchanged at 427.79m hl (+6.2% y/y)
Revenue:After finetuning our model for volumes and also for recent currency variations (mainly pressure on BRL), we forecast a total revenue in FY13 of $ 43,794m, broadly unchanged from our previous forecasts and representing a 10.2% growth y/y (+1% y/y excluding Modelo consolidation).
Normalized EBITDA: We lower our FY13 Normalized EBITDA forecast by 1% to $ 16,724m as the additional 4-week Modelo consolidation (positive impact of about 1% to FY13 group EBITDA) partly compensates for the decline of our forecasts ex-Modelo. All in all, our Normalized EBITDA margin forecast for the full year is lowered by about 200bps (to 38.2%)
Normalized net profit:Our normalized net profit forecast is lowered by about 0.4% to $ 7,350m. Note that we also incorporated a roughly $ 6bn capital gain in the net profit on the revaluation of the Grupo Modelo stake that was already held before the tender offer. This amount was announced by ABI at the time of closing the Modelo acquisition. The capital gain is purely an accounting issue with obviously no cash impact.
Our View:
The reduction of our underlying assumptions (ex-Modelo) reflects our view that trading conditions have been tougher in 2Q than initially expected. ABI IR typically does not comment on trading conditions but sector data and discussions with peers has made us more prudent, specifically on Brazil and Europe (both Western and Central & EasternEurope). Visibility on a potential pick up in volumes in the second half of the year for these zones remains fairly low at this stage. The lack of visibility and a valuation we consider almost fair prompt us to reiterate our Hold rating. We also maintain our € 75 target price.