EQUITY RESEARCH Heineken April 2013

Company update
24 April 2013

Heineken
Buy (maintained)
Price (24/04/13)

Hangover from 1Q13, lowering outlook

Despite low expectations, Heineken disappointed with its 1Q13 results update. Organic growth was down 2.7% and organic EBIT (beia) declined to the mid single digits. Consolidated beer volume dropped 4.7% versus consensus of +0.6%. A bigger surprise was that Heineken lowered expectations for full-year 2013 to only modest EBIT (beia) margin expansion (INGF 16.0%, up 20bp YoY now) and modest organic growth expansion (INGF 2.4%) compared to consensus of 16.5% and organic growth of 3.6% for 2013. We lower our EPS by 14% for 2013 and by 11% for 2014. Furthermore, we lower our target price to 63.5 but maintain our BUY. For the short-term though, and in the run up to 1H13 results, Heineken remains on our Benelux least preferred list.
756,180 37.0 31,050.0 14,022 46,143 1.5

54.00
Target price (12-mth) 63.50 (previously 65.00) Forecast total return

19.1%
Food & Beverage Netherlands Bloomberg: HEIA NA Reuters: HEIN.AS Share data
Avg daily volume (3-mth) Free float (%) Market cap (m) Net debt (1F, m) Enterprise value (1F, m) Dividend yield (1F, %)

Source: Company data, ING estimates

Share price performance

70 60 50 40 30 20 10 4/08 4/09 4/10 Price 4/11 4/12 4/13

1Q13 weaker than feared. Heineken reported -4.7% consolidated beer volume growth for 1Q13 (compared to consensus of 0.6%). FThe negative surprise in the results came from both developed markets, with Western Europe -8.8% and Americas -2.4%, as well as from Emerging Markets, which saw a YoY slowdown (on tough comparables of -4.6% in Africa and -1.4% in Asia Pacific). Organic growth was a disappointing -2.7% (compared to consensus of +2.2%) on -4.7% volume momentum and +1.8% price/mix. The Heineken brand also had a weak start to the year at -4.7%, but this was mainly on destocking. Lowering 2013 guidance. Not only did the weak start to the year negatively surprise, but Heineken also lowered guidance for both volume and EBIT margin expansion for 2013. Initially the expectation was for an improvement in volume momentum YoY (2.8% above 2012 consolidated beer volume growth), but we now expect only 0-1%. Furthermore, negative operating leverage will impact margins in Western Europe and Africa, just to name two regions, and aside from the mix improvement from APB (of c.10bp), we lower our EBIT margin expectation to 16.0% from 16.5% previously. Valuation and estimates. In our view, consensus expectations are too high and will have to come down meaningfully for 2013 and 2014. We lower our EPS for 2013, 2014, and 2015 to 2.87, 3.38 and 3.76, respectively (-14%, -11% and -7%). We lower our target price to 63.5, down from 65.0. The drop in volume growth has also had a negative operating leverage effect. Based on current valuation levels, in the medium-term Heineken remains attractive, but in the run up to 1H13 results, we stay on the sidelines.
Forecasts and ratios
Year end Dec (m) Revenues Normalised EBITDA Normalised net profit Normalised EPS () Normalised PER (x) EV/normalised EBITDA (x) FCF yield (%) Dividend yield (%) Price/book (x) Normalised ROE (%)
Source: Company data, ING estimates

AEX All Share (rebased)

Source: ING

2011 17,123 3,623 1,584 2.71 19.9 11.3 6.3 1.5 3.2 16.4

2012 19,893 4,227 1,696 2.95 18.3 10.9 7.9 1.6 2.7 15.8

2013F 19,571 4,225 1,653 2.87 18.8 10.9 5.4 1.5 2.7 14.4

2014F 19,925 4,654 1,942 3.38 16.0 9.7 7.0 1.8 2.7 16.9

2015F 20,415 4,955 2,160 3.76 14.4 8.9 7.6 2.0 2.5 17.9

Marco Gulpers, CFA

Amsterdam +31 20 563 8758 marco.gulpers@ing.com

research.ing.com

1 SEE THE DISCLOSURES APPENDIX FOR IMPORTANT DISCLOSURES & ANALYST CERTIFICATION

Heineken

April 2013

1Q13 weaker than feared. Heineken reported 1Q13 with -4.7% consolidated beer volume growth (compared to consensus at 0.6%). The negative surprise in the results came from both developed markets, with Western Europe -8.8% and Americas -2.4%, as well as from Emerging Markets, which saw a YoY slowdown (on tough comparables of -4.6% in Africa and -1.4% in Asia Pacific). Organic growth was a disappointing -2.7% (compared to +2.2% for consensus) on -4.7% volume momentum and +1.8% price/mix. The Heineken brand also had a weak start to the year at -4.7%, but this was mainly on destocking.
Fig 1 Heinekens slower-than-expected start to the year consolidated beer growth (%)
1Q11 Western Europe C/E Europe Americas Africa/M East Asia-Pacific Consolidated beer Group beer 0.6 7.3 5.8 13.0 7.0 5.5 6.7 2Q11 1.3 9.5 -7.9 5.5 8.7 2.9 2.5 3Q11 -1.7 5.8 0.8 6.4 12.0 2.2 2.3 4Q11 0.4 7.1 2.1 5.8 8.9 3.4 5.0 1Q12 -1.3 7.9 5.2 9.7 7.5 4.7 4.7 2Q12 -4.5 4.9 2.4 0.5 3.7 0.9 1.9 3Q12 -2.1 3.5 5.2 2.5 -2.8 2.2 2.6 4Q12 -0.7 0.6 4.1 1.7 0.5 1.6 2.0 1Q13 -8.8 -3.7 -2.4 -4.6 -1.4 -4.7 -2.7 2Q13F -2.0 2.0 4.0 2.0 4.0 1.8 3.0 3Q13F -2.0 3.0 4.0 4.0 7.5 2.1 3.0 4Q13F -2.0 3.0 4.0 7.0 7.5 3.4 3.8 FY13F -3.7 1.1 2.4 2.1 4.4 0.7 1.8

Source: Company data, ING estimates

The outlook statement is quite cautious, as Heineken expects challenging markets in Africa and Western Europe to continue to impact volume growth, leading to moderation of volume growth for 2013. Heineken still expects positive volume and organic growth for 2013, but only with higher growth regions offsetting volume weakness in developed countries. Lowering 2013 guidance. Not only did the weak start to the year negatively surprise, but Heineken also lowered guidance for both volume and EBIT margin expansion for 2013. Initially the expectation was for an improvement in volume momentum YoY (2.8% above 2012 consolidated beer volume growth), but we now expect only 0-1%. Furthermore, negative operating leverage will impact margins in Western Europe and Africa, just to name two regions, and aside from the mix improvement from APB (of c.10bp), we lower our EBIT margin expectation to 16.0% from 16.5% previously.
Fig 2 Heineken volume momentum (mhl)
1Q12 Consolidated beer volume Western Europe C/E Europe Americas Africa/M East Asia-Pacific Consolidated beer Group Beer volume Western Europe C/E Europe Americas Africa/M East Asia-Pacific Group Beer volume Total Consolidated volume Western Europe C/E Europe Americas Africa/M East Asia-Pacific Consolidated volume 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

9.1 9.0 11.8 5.7 0.3 35.9 9.2 10.4 14.6 7.3 7.0 48.5 13.1 9.6 11.8 7.2 0.3 42.0

12.5 14.2 13.7 5.9 0.3 46.6 12.6 16.4 15.5 7.5 7.6 59.6 17.7 15.0 14.2 7.6 0.3 54.8

12.4 14.2 13.6 5.5 0.4 46.1 12.5 16.4 15.6 7.2 7.0 58.7 17.8 15.0 13.9 7.5 0.4 54.6

10.3 9.9 14.0 6.2 2.7 43.1 10.3 11.5 17.1 8.4 7.1 54.4 14.7 10.5 14.4 8.0 2.7 50.3

8.3 8.7 11.5 5.5 4.0 38.0 8.5 10.1 14.3 6.9 6.9 46.7 12.0 9.2 11.9 7.0 4.1 44.2

12.3 14.5 14.2 6.0 3.6 50.6 12.4 16.7 15.2 7.7 7.9 59.8 17.5 15.3 14.7 7.7 3.6 58.7

12.2 14.6 14.1 5.7 4.1 50.7 12.3 16.9 16.2 7.4 8.1 60.9 17.4 15.4 14.4 7.9 4.1 59.3

10.1 10.2 14.6 6.6 4.2 45.7 10.2 11.8 17.8 8.9 8.3 57.0 14.4 10.8 15.0 8.6 4.2 52.9

Source: Company data, ING estimates

Heineken

April 2013

Model is not broken, but impacted by several one-offs

Despite the fact that 1Q13 is only about 20% of annual sales, and far less in terms of profits, the current weak start is enough to lower guidance for full-year 2013. Although 1Q13 was impacted by several one-offs, Heineken believes it will be difficult to catch up in the remainder of the year. The one-offs in 1Q13: 1) One less trading day 2) Destocking in France and in the US 3) Excise duty increases (mainly a reversal of 250k hl in France) 4) Poor weather: Western Europe experienced temperatures up to 5-6 degrees lower, Brazil had the coldest Carnaval in a long time, and in Southern Europe, heavy rains in 1Q13 impacted the on-premise market.
Fig 3 Heineken: Net sales and EBIT (beia) per region (m)
2010 Western Europe Net sales EBIT (beia) EBIT (beia) (%) Eastern Europe Net sales EBIT (beia) EBIT (beia) (%) Americas Net sales EBIT (beia) EBIT (beia) (%) Africa/ME Net sales EBIT (beia) EBIT (beia) (%) Asia-Pacific Net sales EBIT (beia) EBIT (beia) (%) Corporate Sales HQ overhead Group Net sales EBIT (beia) EBIT (beia) (%) 2011 2012 2013F 2014F 2015F

7,894 925.0 11.7 3,143 378.0 12.0 3,296 600.0 18.2 1,988 560.0 28.2 206 124.0 60.2 (393) 36 16,134 2,623 16.3

7,752 962.0 12.4 3,229 346.0 10.7 4,029 655.0 16.3 2,223 570.0 25.6 216 176.0 81.5 (326) (12) 17,123 2,697 15.8

7,785 965.7 12.4 3,280 349.0 10.6 4,523 748.0 16.5 2,639 652.0 24.7 527 267.0 50.7 (371) (69) 18,383 2,913 15.8

7,322 879.0 12.0 3,370 360.6 10.7 4,726 769.8 16.3 2,682 657.3 24.5 1,833 551.0 30.1 (362) (78) 19,571 3,140 16.0

7,249 882.6 12.2 3,438 372.6 10.8 4,868 802.8 16.5 2,816 695.6 24.7 1,925 582.1 30.2 (370) (78) 19,925 3,258 16.3

7,249 920.5 12.7 3,507 409.0 11.7 5,014 891.7 17.8 2,956 751.9 25.4 2,060 630.9 30.6 (370) (80) 20,415 3,524 17.3

Source: Company data, ING estimates

Potential share overhang risk limited but still

Femsa has the right to sell 1% of shareholding per quarter Upon completion of the acquisition of FEMSA on 30 April 2010, CB Equity LLP (FEMSA Group) received Heineken N.V. shares (and Heineken Holding N.V. shares). The following applies:

Subject to certain exceptions, FEMSA, CB Equity LLP and any member of the
FEMSA group shall not increase its shareholding in Heineken Holding N.V. above 20% and shall not increase its holding in the Heineken Group above a maximum of 20% economic interest (such capped percentages referred to as the Voting Ownership Cap).

Heineken

April 2013

FEMSA, CB Equity and any member of the FEMSA group may not sell any shares in
Heineken N.V. (and in Heineken Holding N.V.) for a five-year period, subject to certain exceptions, including amongst others: (i) beginning in year three, the right to sell up to 1% of all outstanding shares of each of Heineken N.V. and Heineken Holding N.V. in any calendar quarter; and (ii) beginning in year three, the right to sell any Heineken N.V. shares and/or any Heineken Holding N.V. shares in any private block sale outside the facilities of a stock exchange, so long as Heineken Holding N.V. (as to Heineken N.V. shares) respectively LArche Green N.V. (as to Heineken Holding N.V. shares) is given first the opportunity to acquire such shares at the market price thereof. In conclusion, FEMSA has the option to sell from May 2013 onwards 1% per quarter in the market or via a private placement (but it then needs to offer it to Heineken first). Although this could create some sort of overhang in the shares, we believe Femsa is interested in maintaining its strategic holding in Heineken, and we expect the risk of a share overhang to be limited.

Valuation and estimates

We revise our estimates for 2013F and beyond following the disappointing 1Q13 results.
Fig 4 Heineken sales (m)
2010 Western Europe E Europe Americas Africa/ME Asia-Pacific Corporate Total 7,894 3,143 3,296 1,988 206 (393) 16,134 2011 7,752 3,229 4,029 2,223 216 (326) 17,123 2012 7,785 3,280 4,523 2,639 527 (371) 18,383 2013F 7,322 3,370 4,726 2,682 1,833 (362) 19,571 2014F 7,249 3,438 4,868 2,816 1,925 (370) 19,925 2015F 7,249 3,507 5,014 2,956 2,060 (370) 20,415

Source: Company data, ING estimates

Fig 5

Heineken EBIT beia (m)

2010 2011 962 346 655 570 176 (12) 2,697 2012 966 349 748 652 267 (69) 2,913 2013F 879 361 770 657 551 (78) 3,140 2014F 883 373 803 696 582 (78) 3,258 2015F 921 409 892 752 631 (80) 3,524

Western Europe E Europe Americas Africa/ME Asia-Pacific Corporate Total

925 378 600 560 124 36 2,623

Source: Company data, ING estimates

Fig 6

Heineken EBIT (beia) including JV (%)

2010 2011 12.4 10.7 16.3 25.6 81.5 -0.4 15.8 2012 12.4 10.6 16.5 24.7 50.7 -2.4 15.8 2013F 12.0 10.7 16.3 24.5 30.1 -2.5 16.0 2014F 12.2 10.8 16.5 24.7 30.2 -2.4 16.3 2015F 12.7 11.7 17.8 25.4 30.6 -2.3 17.3

Western Europe E Europe Americas Africa/ME Asia-Pacific Corporate Total

11.7 12.0 18.2 28.2 60.2 1.4 16.3

Source: Company data, ING estimates

In Figure 7 below, we highlight the difference in our numbers to Bloomberg estimates, and in Figure 8 we highlight the changes we made to our estimates.

Heineken

April 2013

Fig 7

ING vs Bloomberg estimates ()

2013 2014 3.38 3.49 -3.2 2015 3.76 3.88 -3.2

INGF Bloomberg estimate Difference (%)

Source: Bloomberg, ING estimates

2.87 3.01 -4.5

We were more positive on a second half recovery for Heineken, but are now adjusting our assumptions for 2H13 recovery. We thus lower our expectations.
Fig 8 Estimate changes (m)
2013 Old Net sales EBIT EPS () Difference in EPS (%)
Source: Bloomberg, ING estimates

2014 New 19,571 2,738 2.87 -14 Old 19,508 3,309 3.78 New 19,925 3,139 3.38 -11

20,202 2,989 3.36

We lower our target price to 63.5 from 65 previously.

Fig 9 Valuation (x)
Trough PER EV/EBITDA EV/EBITA Average DCF (wacc 7.7%) () Average Input on multiples PER EV/EBITDA EV/EBITA
Source: Company data, ING estimates

2014 Mid-Cycle 50.7 63.1 57.3 57.0 70.3 63.5 15.0 8.0 10.5

Peak 54.0 71.0 65.5 63.5 70.3 66.9 16.0 9.0 12.0

40.5 55.2 49.1 48.3 70.3 59.3 12.0 7.0 9.0

Risks: Further to the premise of market deceleration in Western Europe, downside risks to our investment case include a failure to see a recovery in Nigeria in 2H13, and a reversal in input cost pressures.

Heineken

April 2013

Financials
Year end Dec (m) Income statement Revenues Cost of goods sold Gross profit Operating costs EBITDA Depreciation & amortisation Impairments EBIT Net interest Associates Other pre-tax items Pre-tax profit Tax Minorities Other post-tax items Net profit Normalised EBITDA Normalised EBIT Normalised net profit Balance sheet Tangible fixed assets Intangible fixed assets Other non-current assets Cash & equivalents Other current assets Total assets Short-term debt Other current liabilities Long-term debt Other long-term liabilities Total liabilities Total equity Total liabilities & equity Capital employed Net working capital Net debt (cash) Cash flow Cash flow EBITDA Change in working capital Other non-cash items Operating cash flow Cash interest paid Cash taxes paid Net cash from operating activities Capex Net acquisitions Other net investing cash flows Cash from investing activities Increase (decrease) in equity Increase (decrease) in debt Dividends & minority distribution Other financing cash flow Cash from financing activities Forex & discontinued operations Net change in cash & equivalents FCF 1,880 (147) (114) 1,619 (485) (248) 886 (1,110) (6,175) 0 (7,285) 0 0 (374) 0 (374) 0 (6,773) 261 2,846 220 (67) 2,999 (543) (286) 2,170 (638) (149) 0 (787) 0 0 (338) 0 (338) 0 1,045 2,075 3,609 454 (205) 3,858 (509) (403) 2,946 (664) (225) 0 (889) 0 0 (408) 0 (408) 0 1,649 2,791 3,623 251 (76) 3,798 (430) (465) 2,903 (755) (1,586) 0 (2,341) 0 0 (478) 0 (478) 0 85 2,578 5,220 117 (28) 5,309 (270) (525) 4,514 (1,117) (5,526) 0 (6,643) 0 0 (610) 0 (610) 0 (2,739) 3,667 4,284 348 0 4,632 (662) (631) 3,340 (1,500) (999) 0 (2,499) 0 0 (677) 0 (677) 0 164 2,501 4,694 475 0 5,168 (661) (739) 3,769 (1,250) (999) 0 (2,249) 0 0 (668) 0 (668) 0 852 3,180 4,996 96 0 5,093 (627) (823) 3,643 (900) (999) 0 (1,899) 0 0 (759) 0 (759) 0 985 3,370 8,705 7,109 0 698 4,051 20,563 969 3,846 9,772 1,827 16,414 4,149 20,563 14,890 205 10,043 8,892 7,135 0 520 3,633 20,180 1,301 3,696 8,035 2,135 15,167 5,013 20,180 14,349 (63) 8,816 11,341 10,890 0 610 3,702 26,543 994 4,265 8,765 2,695 16,719 9,824 26,543 19,583 (563) 9,149 11,584 10,835 0 813 3,881 27,113 1,188 4,971 9,373 1,503 17,035 10,078 27,113 20,639 (1,090) 9,748 12,717 17,725 0 1,037 4,500 35,979 2,054 5,707 13,069 2,387 23,217 12,762 35,979 27,885 (1,207) 14,086 12,962 17,725 0 601 4,370 35,658 1,554 6,276 13,069 2,387 23,286 12,373 35,658 26,996 (1,905) 14,022 12,946 17,725 0 (547) 4,011 34,136 554 6,391 12,069 2,387 21,401 12,735 34,136 25,358 (2,380) 13,170 12,856 17,725 0 (561) 4,072 34,091 554 6,548 11,069 2,387 20,558 13,533 34,091 25,156 (2,476) 12,184 14,319 (5,365) 8,954 (6,384) 2,570 (804) 0 1,766 (485) 99 (789) 591 (248) (138) 0 205 2,669 1,865 1,013 14,701 (5,446) 9,255 (6,492) 2,763 (874) 0 1,889 (543) 127 (44) 1,429 (286) (124) 0 1,019 2,890 2,016 1,054 16,133 (4,984) 11,149 (7,733) 3,416 (1,118) 0 2,298 (509) 193 0 1,982 (403) (132) 0 1,447 3,609 2,623 1,445 17,123 (5,141) 11,982 (8,599) 3,383 (1,168) 0 2,215 (430) 240 0 2,025 (465) (130) 0 1,430 3,623 2,697 1,584 19,893 (5,799) 14,094 (9,087) 5,007 (1,315) 0 3,692 (270) 213 0 3,635 (525) (160) 0 2,950 4,227 2,912 1,696 19,571 (5,887) 13,684 (9,577) 4,108 (1,370) 0 2,738 (662) 117 59 2,252 (631) (227) 0 1,394 4,225 3,140 1,653 19,925 (5,863) 14,062 (9,527) 4,534 (1,395) 0 3,139 (661) 120 40 2,638 (739) (221) 0 1,679 4,654 3,259 1,942 20,415 (5,882) 14,534 (9,701) 4,833 (1,430) 0 3,402 (627) 122 41 2,939 (823) (226) 0 1,890 4,955 3,525 2,160 2008 2009 2010 2011 2012 2013F 2014F 2015F

Normalised earnings (eg, EBITDA, EBIT, net income and other sector-specific line items) are in the opinion of the analyst the best representation of a companys underlying and sustainable earnings derived from its regular operating activities. Source: Company data, ING estimates

Heineken

April 2013

Valuation, ratios and metrics

Year end Dec Performance & returns Revenue growth (%) Normalised EBITDA growth (%) Normalised EBIT growth (%) Normalised EPS growth (%) Gross margin (%) Normalised EBITDA margin (%) Normalised EBIT margin (%) Reported net margin (%) Reported ROE (%) Normalised ROA (%) ROAIC (%) ROACE (%) ROACE - WACC (%) Leverage & solvency Working capital as % of sales Net debt (cash)/EBITDA (x) Net debt (cash)/equity (%) EBITDA net interest coverage (x) Current ratio (x) Dividend cover (cash flow) (x) Valuation EV/revenue (x) EV/normalised EBITDA (x) EV/normalised EBIT (x) EV/capital employed (x) EV/invested capital (x) Normalised PER (x) Price/book (x) Dividend yield (%) FCF yield (%) Per share data Reported EPS () Normalised EPS () Dividend per share () Equity FCFPS () BV/share ()
Source: Company data, ING estimates

2008

2009

2010

2011

2012

2013F

2014F

2015F

27.3 12.4 7.4 -9.5 62.5 18.6 13.0 1.4 4.7 11.5 11.7 16.3 8.8

2.7 8.3 8.1 4.1 63.0 19.7 13.7 6.9 23.7 9.9 9.7 13.8 6.3

9.7 24.9 30.1 19.5 69.1 22.4 16.3 9.0 20.3 11.2 9.8 15.5 8.0

6.1 0.39 2.8 5.3 70.0 21.2 15.8 8.4 14.8 10.1 7.9 13.4 5.9

16.2 16.7 8.0 8.9 70.8 21.2 14.6 14.8 27.5 9.2 12.1 12.0 4.5

-1.6 -0.05 7.8 -2.5 69.9 21.6 16.0 7.1 12.1 8.8 7.1 11.4 3.9

1.8 10.1 3.8 17.5 70.6 23.4 16.4 8.4 14.6 9.3 8.4 12.5 5.0

2.5 6.5 8.2 11.2 71.2 24.3 17.3 9.3 15.7 10.3 9.3 14.0 6.5

1.4 3.9 242.1 5.3 0.99 0.40

-0.43 3.2 175.9 5.1 0.83 5.5

-3.5 2.7 93.1 6.7 0.82 6.6

-6.4 2.9 96.7 7.9 0.76 5.5

-6.1 2.8 110.4 18.5 0.71 6.6

-9.7 3.4 113.3 6.2 0.63 3.7

-11.9 2.9 103.4 6.9 0.50 4.8

-12.1 2.5 90.0 7.7 0.49 4.6

2.9 15.5 22.2 2.8 2.5 26.1 6.8 1.1 0.63

2.7 13.9 19.9 2.8 2.4 25.1 5.6 1.2 5.2

2.5 11.2 15.4 2.1 1.8 21.0 3.2 1.4 6.9

2.4 11.3 15.2 2.0 1.9 19.9 3.2 1.5 6.3

2.3 10.9 15.9 1.7 1.5 18.3 2.7 1.6 7.9

2.4 10.9 14.7 1.7 1.6 18.8 2.7 1.5 5.4

2.3 9.7 13.9 1.8 1.6 16.0 2.7 1.8 7.0

2.2 8.9 12.6 1.8 1.6 14.4 2.5 2.0 7.6

0.42 2.07 0.62 (0.46) 7.89

2.08 2.15 0.65 3.13 9.63

2.57 2.57 0.76 4.06 16.97

2.44 2.71 0.83 3.67 16.69

5.13 2.95 0.89 5.91 20.33

2.43 2.87 0.82 3.20 19.66

2.92 3.38 0.96 4.38 20.28

3.29 3.76 1.07 4.77 21.67

Company profile

Heineken NV is a Netherlands-based company involved in the manufacturing and selling of beer, with operations in over 170 countries. While its principal brand is Heineken, the company owns a portfolio of 250 other brands. In addition to manufacturing beer, Heineken is also the worlds biggest producer of cider, including brands such as Strongbow Gold and Bulmers. Heineken operates in five geographical segments: (1) Western Europe (19% of 2012 EBIT); (2) Central and Eastern Europe (8%); (3) Africa and the Middle East (15%); (4) the Americas (17%); and (5) Asia-Pacific (41%).

Heineken

April 2013

Disclosures Appendix
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US regulatory disclosures The following subject company/ies of this report are or have been a client of ING Financial Markets LLC or an affiliate within the last 12 months and have received investment banking services: Heineken Holding NV One or more members of ING Group has received compensation for investment banking services from the following subject company/ies of this report within the last 12 months: Heineken Holding NV

Valuation & risks: For details of the methodologies used to determine our price targets and risks related to the achievement of these targets refer to main body of report and/or the most recent equity company report at http://research.ing.com. Research analyst(s): The research analyst(s) for this report may not be registered/qualified as a research analyst with the NYSE and/or NASD. The research analyst(s) for this report may not be an associated person of ING Financial Markets LLC and therefore may not be subject to Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held by the research analysts account. European regulatory disclosures One or more members of ING Group has lead managed or co-lead managed a public offering of the securities of the following subject company/ies of this report in the last 12 months: Heineken Holding NV The following subject company/ies of this report are or have been party to an investment banking agreement with one or more members of ING Group over the last 12 months: Heineken Holding NV

The remuneration of research analysts is not tied to specific investment banking transactions performed by ING Group although it is based in part on overall revenues, to which investment banking contribute. Financial interests: One of more members of ING Group may hold financial interests in the companies covered in this report other than those disclosed above. Securities prices: Prices are taken as of the previous days close on the home market unless otherwise stated. Job titles. The functional job title of the person/s responsible for the recommendations contained in this report is equity research analyst unless otherwise stated. Corporate titles may differ from functional job titles. Conflicts of interest policy. ING manages conflicts of interest arising as a result of the preparation and publication of research through its use of internal databases, notifications by the relevant employees and Chinese walls as monitored by ING Compliance. For further details see our research policies page at http://research.ing.com. Other disclosures Target prices, where included, are based on reasonable assumptions supported by objective data. Unless otherwise stated, neither historic share price performance data nor ING projections on potential share price performance reflect the impact of commissions, fees and charges. Past performance is not indicative of future results. Forecasts are not a reliable indicator of future performance. FOREIGN AFFILIATES DISCLOSURES Each ING legal entity which produces research is a subsidiary, branch or affiliate of ING Bank N.V. See back page for the addresses and primary securities regulator for each of these entities. RATING DISTRIBUTION (as of end 1Q13)
Equity coverage Buy Hold Sell 41% 47% 12% 100% Investment Banking clients* 63% 68% 35%

RATING DEFINITIONS
Buy: Forecast 12-mth absolute total return greater than +15% Hold: Forecast 12-mth absolute total return of +15% to -5% Sell: Forecast 12-mth absolute total return less than -5%
Total return: forecast share price appreciation to target price plus forecast annual dividend. Price volatility and our preference for not changing recommendations too frequently means forecast returns may fall outside of the above ranges at times.

* Percentage of companies in each rating category that are Investment Banking clients of ING Financial Markets LLC or an affiliate.

Heineken

April 2013

PRICE & RATINGS HISTORY TO 02/04/13: HEINEKEN (HEIN.AS)

70 65 60 55 50 45 40 35 30 1/4/10 1/7/10 1/10/10 1/1/11 1/4/11 1/7/11 Price 1/10/11 1/1/12 1/4/12 1/7/12 1/10/12 1/1/13 1/4/13 H B

Target price

B = Buy; H = Hold; S = Sell; NR = Not Rated; R = Restricted Chart shows ING coverage: current analyst may or may not have covered the stock for the entire period shown Where ING coverage is longer than three years, chart shows recommendation current at start of the share price history

Source: ING

Heineken

April 2013

AMSTERDAM
Tel: 31 20 563 8758 Bratislava Tel: 421 2 5934 6111 Bucharest Tel: 40 21 222 1600 Budapest Tel: 36 1 235 8800 Buenos Aires Tel: 54 11 4310 4700 Dublin Tel: 353 1 638 4000

BRUSSELS
Tel: 32 2 547 7534 Geneva Tel: 41 22 593 8050 Hong Kong Tel: 852 2848 8488 Istanbul Tel: 90 212 329 0752 Kiev Tel: 380 44 230 3030 Madrid Tel: 34 91 789 8880

LONDON
Tel: 44 20 7767 1000 Manila Tel: 63 2 479 8888 Mexico City Tel: 52 55 5258 2000 Milan Tel: 39 02 89629 3610 Moscow Tel: 7 495 755 5400 Paris Tel: 33 1 56 39 32 84

NEW YORK
Tel: 1 646 424 6000 Prague Tel: 420 257 474 111 Sao Paulo Tel: 55 11 4504 6000 Seoul Tel: 82 2 317 1800 Shanghai Tel: 86 21 2020 2000 Sofia Tel: 359 2 917 6400

SINGAPORE
Tel: 65 6535 3688 Taipei Tel: 886 2 8729 7600 Tokyo Tel: 81 3 3217 0301 Warsaw Tel: 48 22 820 5018

Research offices: legal entity/address/primary securities regulator

Amsterdam Brussels Bucharest Budapest Istanbul London Manila Milan Moscow Mumbai New York Singapore Warsaw ING Bank N.V., Foppingadreef 7, Amsterdam, Netherlands, 1102BD. Netherlands Authority for the Financial Markets ING Belgium S.A./N.V., Avenue Marnix 24, Brussels, Belgium, B-1000. Financial Services and Market Authority (FSMA) ING Bank N.V. Amsterdam - Bucharest Branch, 48 Lancu de Hunedoara Bd., 011745, Bucharest 1, Romania. Romanian National Securities and Exchange Commission, Romanian National Bank ING Bank N.V. Hungary Branch, Dozsa Gyorgy ut 84\B, H - 1068 Budapest, Hungary. Hungarian Financial Supervisory Authority ING Bank A.S., ING Bank Headquarters, Resitpasa Mahallesi Eski Buyukdere Cad. No:8, 34467 Sariyer, Istanbul , Turkey. Capital Markets Board ING Bank N.V. London Branch, 60 London Wall, London EC2M 5TQ, United Kingdom. Authorised by the Dutch Central Bank ING Bank N.V., Manila Branch, 20/F Tower One, Ayala Triangle, Ayala Avenue, 1226 Makati City, Philippines. Philippine Securities and Exchange Commission ING Bank N.V. Milano, Via Paleocapa, 5, Milano, Italy, 20121. Commissione Nazionale per le Societ e la Borsa ING BANK (EURASIA) ZAO, 36, Krasnoproletarskaya ulitsa, 127473 Moscow, Russia. Federal Financial Markets Service ING Vysya Bank Limited, Plot C-12, Block-G, 7th Floor, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051, India. Securities and Exchange Board of India ING Financial Markets LLC, 1325 Avenue of the Americas, New York, United States, 10019. Securities and Exchange Commission ING Bank N.V. Singapore Branch, 19/F Republic Plaza, 9 Raffles Place, #19-02, Singapore, 048619. Monetary Authority of Singapore ING Securities S.A., Plac Trzech Krzyzy, 10/14, Warsaw, Poland, 00-499. Polish Financial Supervision Authority

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EQ

Additional information is available on request

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