Late Easter dampens AB InBev’s beer sales

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Late Easter dampens AB InBev’s beer sales

Published Date: 2019-05-09 | Source: Stephen Gunnion | Author: Stephen Gunnion

Late Easter dampens AB InBev’s beer sales

The world's biggest brewer says SA and Argentina reported weaker consumption in the first quarter as consumer spending remained under pressure.

Anheuser-Busch InBev has reported a mixed start to its 2019 financial year as strong performances from markets including Brazil, Nigeria, Europe, Peru and Colombia were offset by softer beer sales in SA and Argentina, where consumer spending remains under pressure. The world's biggest brewer said the late timing of the Easter holidays also affected first-quarter sales in some of its markets, including the US, Mexico, Colombia, SA and Australia. However, it expects this to even out in second-quarter sales.

Brazil was the standout performer in the three months to end-March, with both its beer and non-beer business growing by double digits. It said it also continued to gain share in the growing premium segment of the market, reinforcing its belief that growth in the segment would be achieved through a superior portfolio of brands, not just in Brazil but globally.

Revenue grew by 5.9% in the quarter due to higher volumes and increased demand for its premium brands. It sold 1.3% more beer and 4.9% of its non-beer products. Its three global brands, Budweiser, Stella Artois and Corona, grew combined revenues by 8.5%, with the strongest growth outside of their home markets. Cost of sales rose 6% and earnings before interest, tax, depreciation and amortisation increased by 8.2%.

Normalised profit for the quarter came in 74% higher at $2.52 billion but underlying profit - which excludes mark-to-market gains linked to the hedging of its share-based payment programs and the impact of hyperinflation - fell 6.7% to $1.57 billion. Similarly, underlying earnings per share fell 7.1% to $0.79 as its strong performance was more than offset by the negative impact of unfavourable currency translation effects.

Its revenue and normalised profit numbers missed estimates in a Reuters poll of analysts.

The brewer said it realised synergies and cost savings of $100 million over the quarter from its $79 billion takeover of SABMiller in 2016. To date, it has delivered $3.04 billion of the expected $3.2 billion in savings.

It is now exploring the listing of a minority stake in its Asia Pacific (APAC) business on the Hong Kong Stock Exchange, depending on market conditions and the valuation it can fetch on the market. While this would also help it pay down debt, it said it remained committed to reaching a net debt to EBITDA ratio below four times by the end of next year whether it lists the business or not.

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