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Valuation Measuring and managing the value ofpanies - Koller T.

Koller T., Murrin J. Valuation Measuring and managing the value ofpanies - Wiley & sons , 2000. - 508 p.
ISBN 0-471-36190-9
Download (direct link): valuationmeasuringandmanaging2000.pdf
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Revenues
There are several ways to model revenue growth that allow it to be broken down into its major parts. A Merrill Lynch investment report in December 1998 provided one such model, which we adapted for forecasting purposes. In this model, revenue growth is a function of volume growth, average price changes (price per unit or changing product mix), and acquisitions.
For the Business-as-Usual scenario, we forecast Heineken's underlying volume growth to average 1.5 percent per year (excluding acquisitions), somewhat lower
Page 253
Exhibit 11.16 HeinekenóShort-Term Financial Forecast
Business as usual case
(NLG million)
Revenues
Forecast Forecast Forecast Forecast Forecast 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Volume growth 4.0% 1,0% -1.0% 1.0% 4.0% 2,0% 1.5% 1,5% 1.5% 1.5%
Price increase/Mix change 1.0% 3.0% 3.0% 3.0% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0%
Underlying growth/Organic growth 5.0% 4.0% 2.0% 4.0% 7.0% 4.8% 4.1% 3.9% 3.7% 3.5%
Excise duty increase 0.0% 1.0% 1.0% 1.0% 0.0% 0.0% 00% 0.0% 0.0% 0.0%
Acquisitions 5.0% 4.0% 15.0% 3.0% 2.0% 3.0% 1.0% 1.0% 3.0% 1.0%
Currency changes 0.0% -4.0% -1.0% 3.0% -2.0% -1.0% 0.0% 0.0% 0.0% 0.0%
Revenue growth-modeled 10.0% 5.0% 17.0% 11.0% 7.0% 6.8% 5.1% 4.9% 6.7% 4.5%
Base business revenues (NLG) 9,522 9,573 9,736 10,595 10,431 10,827 11,271 11,711 12,144 12,569
Revenues from acquisitions 452 870 2,453 2,917 3,392 3,969 4,280 4,602 5,262 5,620
Worldwide market growth 3.7% 2.5% 1.2% 2.7% 2.6% 2.0% 2.0% 1.5% 1.5% 1.5%
Worldwide market size (MM HL) 1,196 1,226 1,240 1,273 1,306 1,333 1,359 1,380 1,401 1,422
Market share (%) 4.9% 5.2% 5.7% 5.8% 6.1% 6.2% 6.3% 6.3% 6.5% 6.6%
Total volume sales (MM HL) 59.1 64.3 70.7 73.8 79.1 83.1 85.1 87.3 91.2 93.5
Operating costs as percent of revenues
Duties, levies, and trade taxes 13.6% 13.3% 13.3% 13,7% 13.1% 13,1% 13.1% 13.1% 13.1% 13,1%
Marketing 14.2% 15.1% 11.8% 12.2% 12.6% 12.6% 12.6% 12.6% 12.6% 12.6%
Merchandising 9.9% 9.8% 12.0% 12.1% 11.6% 11.6% 11.6% 11.6% 11.6% 11.6%
Packaging 10.7% 11.0% 11.4% 10.4% 10.5% 10.5% 10.5% 10.5% 10.5% 10.5%
Raw materials 5.7% 5.9% 7.0% 6.5% 5.3% 5.3% 5.3% 5.3% 5.3% 5.3%
Other costs of goods sold 14.1% 13.3% 13.2% 13.9% 13.9% 13.9% 13.9% 13.9% 13.9% 13.9%
Personnel costs 16.9% 16.6% 17.8% 16.8% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6%
Interest rates Int rate on excess mkt secs Int rate on existing debt Int rate on new long-term debt
11.0% 10,6% 13.5% 7.8% 8.5%
3.3% 3.3% 3.3% 3.3% 3.3%
8.5% 8.5% 8.5% 8.5% 8.5%
4.3% 4.3% 4.3% 4.3% 4.3%
Taxes
EBITA tax rate 30.5% 35.8% 29.1% 34.4% 33.8% 33.8% 33.8% 33.8% 33.8% 33.8%
Marginal tax rate 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0% 35.0%
Incr def tax/Tax on EBITA -0.8% 11.7% 3.1% -1.5% -5.6% 3.0% 3.0% 3.0% 3.0% 3.0%
Minority interest Min int/income after tax Minority int payout ratio
4.4% 4.4%
-308.9% 125,1%-
4.3% 2.7% 2.6%
116.7% 142.0%-513.5%
4.3%
60.0%
4.3%
60.0%
4.3%
60.0%
4.3%
60.0%
4.3%
60.0%
than the industry because of Heineken's stronger presence in the slower growing developed markets. Adding 1 percent to 3 percent per year additional volume from acquisitions pushes volume growth slightly above the market. As a result, Heineken's market share increases from 6.1 percent to 6.6 percent by 2003.
Geographic mix of sales affects price increases, since prices are lower in emerging markets. We have forecast effective price increases to level out at 2 percent per year as more sales shifts to developing markets. This is somewhat lower than historical price increases. Overall revenue growth, including volume, price changes and acquisitions, is forecast at about 6 percent per year.
Page 254
Exhibit 11.17 HeinekenóBalance Sheet Forecast Assumptions

Business as usual case (NLG million) 1994 1995 1996 1997 1998 Forecast Forecast Forecast Forecast Forecast 1999 2000 2001 2002 2003
Capital expenditures and depreciation
Net PP&E/revenues 45.4% 45.1% 41.9% 41.3% 41.5% 41.5% 41.5% 41.5% 41.5% 41.5%
Depreciation/net PP&E (EOY) 12.5% 11.8% 11.4% 13.2% 14.1% 14.1% 14.1% 14.1% 14.1% 14.1%
Depr on retirements/gross PPE -0.2% 0.7% 9.9% -12.5% 5.2% 1.0% 1.0% 1.0% 1.0% 1.0%
Other assets
Investment facilities/revenues 1.2% 1.1% 0.8% 0.7% 0.6% 0.6% 0.5% 0.5% 0.4% 0.4%
Investments & advances growth 19,3% 14.3% 13.6% 12.7% 14.3% 5.0% 5.0% 5.0% 5.0% 5.0%
Working capital
Inventories/revenues 6.9% 7.6% 8.1% 7.6% 7.2% 7.2% 7.2% 7.2% 7.2% 7.2%
Accounts receivable/revenues 7.9% 8.4% 10.0% 9.4% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8%
Other current assets/revenues 3.6% 3.5% 3.9% 3.6% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%
Operating cash/revenues 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Accounts payable/revenues 5.9% 6.7% 7.3% 6.7% 6.6% 6.6% 6.6% 6.6% 6.6% 6.6%
Other current liabilities/revenues 11.3% 11.7% 11.9% 11.6% 12.4% 11.8% 11.8% 11.8% 11.8% 11.8%
Net working capital/revenues 3.4% 3.1% 4.9% 4.4% 2.7% 3.3% 3.3% 3.3% 3.3% 3.3%
Equity
Dividend payout ratio 21.2% 30.6% 26.8% 23.1% 25.9% 25.9% 100.0% 25.9% 26.5% 100.0%
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