EARNINGS PREVIEW: European Drinks Makers To Show Worst Is Over
April 20 2010 - 7:33AM
Dow Jones News
TAKING THE PULSE: Europe's drinks producers will update on
recent trading in the coming month and are expected to demonstrate
that the worst of the recession is over, at least when it comes to
sales volumes.
Sales figures from Europe's brewers and distillers are expected
to benefit from extremely weak comparatives last year, when a
combination of customer destocking of inventories and weak consumer
confidence hit demand.
Analysts will look for evidence that consumer spending trends
have started to improve in the developed world. The resilience of
emerging markets compared with Europe and the U.S. will benefit
those with exposure there.
The weak comparative figures may disguise what has been a poor
quarter for beer producers, with some volume growth in emerging
markets offsetting further drops in Europe.
The world's largest spirits makers Diageo and Pernod Ricard
meanwhile are expected to post some encouraging figures showing
volume growth for the first time in more than a year.
Recent industry data has pointed to stagnant growth in Europe,
but signs of recovery in the U.S.
COMPANIES TO WATCH
Heineken Holdings NV (HEIO.AE) - Apr. 21 0500GMT
MARKET EXPECTATIONS: Heineken is expected to report a 2.3%
decline in organic revenue in its first quarter trading update.
Beer volumes are expect to decline 4% organically to 24.5 million
hectoliters according to a Dow Jones Newswires survey of four
analysts. Analysts expect lower volumes in the Americas due to
consumers shifting to non premium brands, and lower volumes in
Central and Eastern Europe due to duty increases.
MAIN FOCUS: Analysts will be focusing on the impact of raw
material and energy prices and looking for news on cost cutting.
They don't expect Heineken to give full year earnings guidance.
Pernod Ricard SA (RI.FR) - Apr. 29 0500GMT
MARKET EXPECTATIONS: The French spirits and wine group updates
on its third quarter sales and is expected to post a strong rebound
from last year. Underlying sales are seen about 10% higher for the
latest quarter against easy comparative numbers last year, when
sales dropped 12% due to customers destocking their
inventories.
MAIN FOCUS: Pernod has already indicated that January was a very
good month for sales and analysts expect this to be true of the
quarter as a whole, as trading returns to normal following last
year's disruptions. A strong performance may be considered a
turning point in Pernod's fortunes. Recent industry data suggests
U.S. sales are improving, while Europe should show some recovery
despite some tough markets. Asia meanwhile will benefit from a
later Chinese new year this year. The sales growth will be driven
by volumes but analysts will look for comments on the pricing
environment to see whether the recovery can be sustained. Analysts
will also look to see if marketing spend will continue to rise in
support of brands.
Anheuser Busch InBev (ABI.BT) - May 5 0500GMT
MARKET EXPECTATIONS: Anheuser-Busch InBev (ABI.BT) is expected
to report weak first-quarter results. Sales in the U.S., its
biggest market, are expected to be sluggish, weighed down by the
country's high unemployment rate and struggling economy. Higher
costs, including options expenses for executive compensation, may
also eat into profits during the quarter, analysts say. Sales in
Latin America are expected to be strong, as a minimum wage boost
earlier this year should help buoy beer consumption. But heavy
rainfall in March will also dampen sales, analysts say, as people
stayed inside and drank less.
MAIN FOCUS: The company said in March that Ebitda growth in 2010
would start out at a "low single digit" rate and increase
progressively throughout the year. Investors will want to know
whether that projection is on track, or whether weakness in the
U.S. will subdue expectations for improvement later in the
year.
Diageo PLC (DEO) - May 6 0600 GMT
MARKET EXPECTATIONS: The world's largest spirits company posts
its third quarter trading update on May 6. Like its smaller rival
Pernod Ricard, Diageo is expected to return to more normal trading.
Third quarter sales are expected to rise by 4%-8%, after falling by
7% in the same period last year.
MAIN FOCUS: Analysts will look closely at the figures to make
sure there is a genuine improvement in trading rather than just a
recovery from last year's figures, which were hit by the one-off
impact of industry destocking. Analysts will also look for any
change to the company's guidance for low single digit organic
operating profit growth for the full year. The company has already
started talking about "green shoots" of recovery, particularly in
the U.S., but has a much lower exposure than Pernod to growth
markets like China. With the pricing environment still tough,
analysts will look to the brief statement for indications growth
can be maintained. A recent analyst presentation suggests the trend
for customers to trade up to more expensive brands will return in
time.
Carlsberg (CARL-A.KO) - May 11 0500 GMT
MARKET EXPECTATIONS: Carlsberg is expected to post a net loss of
DKK190 million in the first quarter according to an early Dow Jones
Newswires and Factset survey of four analysts, compared to a loss
of DKK212 million last year. Sales are seen coming in at DKK10.96
billion.
MAIN FOCUS: Carlsberg's first quarters are traditionally small
and loss-making and do not provide significant read-across for the
full year. Eyes will be on the troubled Russian and Eastern
European beer markets and on whether Carlsberg has managed to pass
on a tax increase to consumers. Analysts say the company's
estimates appear low and remain confident that full year guidance
will be reiterated. In February, Carlsberg said it expects net
profit growth of more than 20% this year.
SABMiller PLC (SAB.LN) - May 20 0600 GMT
MARKET EXPECTATIONS: The world's second largest brewer reports
its full-year results and is expected to post earnings per share of
164 cents, up from 137 cents the previous year.
MAIN FOCUS: The company has already said that full-year lager
volumes were flat, so all eyes will be on the group's margin
figures and outlook for the coming year. It is suffering from a
sluggish consumer environment in its mature markets like South
Africa and the U.S. and the effect of large tax hikes in emerging
markets like Colombia. It is however benefiting from falling input
costs as commodity prices ease. Analysts will look closely at SAB's
performance in South Africa where it is facing increasing
competition from a Heineken/Diageo joint venture.
-By Michael Carolan, Dow Jones Newswires; +44 20 7842 9278;
michael.carolan@dowjones.com (Matthew Dalton, Johan Anderberg and
Bart Koster contributed to this report.)
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