Heineken’s quarter one 2023 revenue grew 6% year-on-year given product price adjustments and better product mix from higher premium sales volume led by its Heineken brand, said Maybank Investment Bank Bhd (MIBB) in a recent report.
Quarter one 2023 net profit of RM110 million accounted for 26%/25% of MIBB and consensus full-year earnings estimates. This is in-line, given expectations for moderated consumer spending in financial year 2023. Pre-pandemic, quarter one accounted for 17-18% of full-year earnings estimates.
Earnings before interest and tax however fell 6% year-on-year on higher advertising and promotional (A&P) costs while net profit declined by a narrower 3% year-on-year in absence of higher tax rates from Cukai Makmur throughout financial year 2022.
On a quarter-on-quarter basis, revenue declined by 7% due to the shorter sales period during Chinese New Year. Lower effective tax rate of 24% led to a net profit growth of 5% quarter-on-quarter.
MIBB believes inflationary pressures on consumer spending will be prevalent in sequential quarters but HEIM’s strong product portfolio and stickiness will provide some buffer if sales volume begins to weaken.
“We also expect HEIM to ramp up on A&P to continue driving traffic to on-trade channels and sustain off-trade sales in the near-term,” said MIBB.
Key upside to top line growth lies with the return of international tourism and potential margin accretion through easing spot commodity prices.