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AB InBev Takes US Hit, Overshadowing World Cup Boost

Published on Jul 30 2018 10:30 AM in Drinks tagged: Trending Posts / AB Inbev

AB InBev Takes US Hit, Overshadowing World Cup Boost

Anheuser-Busch InBev, the world's largest brewer, suffered a fall in volumes in the United States, its biggest market, offsetting a boost from the World Cup to sales of premium lagers in Europe and Latin America.

The company reported a higher than expected core profit but lower than expected earnings per share, with market attention drawn to the performance of its US operations where sales to wholesalers dropped by 5.1%.

There, its Budweiser and Bud Light lost market share as consumers traded up to higher-priced products such as craft beer, while freight costs rose and aluminium prices were higher, even before the impact of US tariffs.

"The US trends are weaker than expected. Every other region did well," said beverages analyst Trevor Stirling of Bernstein Research.

Revenue And Profit

The company said revenue and core profit would rise strongly in 2018, with growth accelerating in the rest of the year. It said it aimed to increase revenue per hectolitre by more than the rate of inflation, essentially by persuading consumers to shift to more expensive beers.

Revenue from higher-margin premium lagers rose in many markets at more than double the rate of growth for the company as a whole. Part of the improvement was due to AB InBev's sponsorship of the World Cup, principally involving Budweiser.

Other than the United States, earnings grew in all its major markets, including in South Africa despite lower volumes.

In the United States, sales to retailers, more reflective of actual consumption, were down a more modest 3.1%. AB InBev said that about half of the market decline resulted from the earlier Easter and the Fourth of July holiday falling in midweek.

In its second-largest market, Brazil, the positive impact of the World Cup was almost wiped out by the hit from a truckers strike in May over higher diesel prices, but price increases ensured healthy profits.

Finance Director Felipe Dutra said the World Cup would increase annual company volumes by between 0.35 and 0.40 percentage points, with for example increaseddrinking during normally slack winter weekdays in Brazil and Argentina.

Second-quarter core profit or EBTIDA rose 7.0% on a like-for-like basis to $5.57 billion, above the average forecast in a Reuters poll of $5.49 billion.

Earnings per share increased by 15.8% to $1.10, below the average expectation of $1.15.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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