Heineken Light at the end of the tunnel but 3Q/2H might still be a bump in the road
An unprecedented inflation shock has pushed up raw materials, consumables and services as a percentage of sales by c. 5ppt in the past three years. Heineken has swiftly responded and increased revenue per hl by more than 20% over 2021/2 with a further double digit growth in 1H23. Beer pricing has historically been sticky and we expect it to be no different this time. Some important input costs are now easing although existing hedges are delaying the full impact into 2024. The combination of easing inflation headwinds and an attractive valuation is exciting, but our cautious stance on 3Q/2H momentum prompts us from becoming more enthusiastic. We maintain our Accumulate rating and € 110 target price for now.Heineken is an international brewer and engaged in the production and distribution of beer brands in 178 countries. Co. is committed to the marketing and consumption of its more than 250 international premium, regional, local and specialty beers and ciders. These include Heineken®, Amstel, Anchor, Biere Larue, Bintang, Birra Moretti, Cruzcampo, Desperados, Dos Equis, Foster's, Newcastle Brown Ale, Ochota, Primus, Sagres, Sol, Star, Strongbow, Tecate, Tiger and Zywiec. In addition, Co. is the cider maker with brands such as Strongbow® and Bulmer's®. Some of its wholesalers also distribute wine, spirits and soft drinks.
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