Bernstein sees margin expansion 'finally kicking in' for brewers

Heineken Holding NV

10/11/2023 11:41

** Bernstein expects robust mid single digit revenue growth
for European and American alcoholic beverages, and gross margin
expansion, especially for the brewers, as input cost headwinds
recede    
    ** It says some of the brewers' key markets, such as Vietnam
and Nigeria, should stabilize, while Brazil, Mexico and India
continue to perform
    ** The broker expects U.S. spirits growth returning to
normal in 2024, seeing concerns over elevated inventory levels
mostly overblown 
    ** It notes the improving trends in China, and sees the
environment for both spirits and brewers to be supportive ahead
of 2024 
    ** Bernstein upgrades Carlsberg  CARLb.CO  to "outperform"
from "market-perform" calling the Danish company "the unsung
hero of the brewers"
    ** It points out that despite lower exposure to high growth
markets, Carlsberg has delivered steady growth, with very strong
cash conversion and returns to shareholders 
    ** The broker expects Carlsberg to hit the upper end of
3%-5% organic revenue growth guidance
    ** "We see room for further modest expansion, from country-
and brand-mix, operating leverage in some Asian markets, and
input costs normalizing," as per the brokerage 
    ** Pernod Ricard  PERP.PA  is its top pick among spirits,
and Heineken  HEIO.AS  among brewers (both "outperform"-rated) 
  

 (Reporting by Marta Frąckowiak)
 ((marta.frackowiak@thomsonreuters.com))