Financial Analysis Heineken

Vertical and horizontal analysis & first overview financial statements

The vertical and horizontal analysis give a quick overview of the plan developments of the firm within a specific time period. If focusing at the analyses from Heineken, the characteristics can immediately be identified as out of line.

• Sales: grew by an average of 5.5% each year between 2009 and 2013, but this sales growth is declining from a year to another (110% in 2010 to 104% in 2013). This could indicate that Heineken is struggling to further differentiate themselves or to continue tapping into new (emerging) markets.
• Gross margin: is stable from 2009 to 2013 around 34.5% to 36.5% with a small improvement in 2013. This normally indicates that Heineken is satisfied with the way they allocate their costs, and do not see direct need to improve its cost structure. Looking at profits, this however might not immediately be desired, so this will be further investigated within this report.
• Interest expenses: Decreased from 4.31% in 2009 to 3.09% in 2013. This indicates Heineken has focused on what it mentioned in their 2008 report of decreasing its debt. Looking at the current liabilities, however, shows that these numbers actually increased. We do see an initial decrease in non-current liabilities but these increase after 2010. The increase however is smaller (in absolute and percentage terms) than the total increase in assets, making it understandable that the expenses become relatively smaller compared to sales. This on turn means, that Heineken has not immediately been able to reduce its total debt, but rather make it relatively smaller to sales.
• High differences in other income: One of the biggest irregularities in the balance sheet is the percentage change of other income. For example, the percentage change in other income from 2011 to 2012 is 2359%. This number flows throughout the entire income statement in 2012, which makes these numbers highly irregular to other years. Therefore we should consider (in further analyses) why this number is so high, and if these should be considered in our further analysis or rather taken as an exceptional year
• Increase in amortization, depreciation, and impairments: We notice there is a structural increase in this post. This can however be easily explained looking at the balance sheet, in which they also increase assets for almost 70% during the last 5 years. It would on turn make sense that this number is higher, as deprecation will never incur on both non-current as current assets within 5 years.

Cash flow analysis: BCG Matrix

Within this part, Heineken will be evaluated on its three different cash-flow statements. We will use this information to estimate Heineken’s place within the life-cycle of the firm (4 quadrants of the BCG-matrix). Additionally, we will use market growth and market share information from the three biggest competitors to scale Heinekens place. This however does not take in consideration any other factors than market share and market growth, which will be later evaluated within this analysis.