AB InBev Earnings Miss Estimates on Weakness in U.S. and Brazil

By Steve Wynne-Jones
AB InBev Earnings Miss Estimates on Weakness in U.S. and Brazil

Anheuser-Busch InBev NV, the world’s biggest brewer, reported second-quarter profit growth that missed analyst estimates on worse-than-expected beer sales in Brazil, the U.S. and China.

Adjusted earnings before interest, taxes, depreciation and amortization rose 4.6 percent on an organic basis to $4.16 billion, the Leuven, Belgium-based maker of Stella Artois said Thursday in a statement. That lagged behind the median estimate of 17 analysts for 8 percent growth. The shares fell as much as 3.8 percent in Brussels.

Faced with declining popularity of its flagship Bud and Bud Light brands, AB InBev is looking elsewhere for growth with different beer styles, new packaging like recloseable aluminum bottles and acquisitions of fast-growing American craft brews such as Elysian and 10 Barrel. The company is also grappling with weakening consumer sentiment in Brazil, its second-biggest market, which benefited from hosting soccer’s World Cup last year.

The results were “a fairly sizeable miss on the organic lines,” Eamonn Ferry, an analyst at Exane BNP Paribas, wrote in a note to investors.

AB InBev said it expects revenue growth to accelerate in the second half of the year.


Drink Volume

AB InBev fell 3.8 percent to 109.20 euros at 9:01 a.m. in Brussels.

The volume of drinks sold fell 2.2 percent in the period, below analysts’ expectations for a 0.2 percent dip. The biggest falloff came in Brazil, where beer shipments declined 8.6 percent, with more than half of that decline due to lapping the one-time boost from the World Cup. Economic conditions were also “unfavorable,” the company said. Profit margins there widened as the company spent less on marketing this year.

In the U.S., AB InBev continued to struggle, with sales to retailers down 2.2 percent, a deceleration from the first quarter. The company’s U.S. market share also declined as Bud and Bud Light sales fell by low single digits, while its newer fruit-flavored range of Rita beers face increased competition, it said.

Speaking about the U.S. in a phone interview, Chief Financial Officer Felipe Dutra said “we know we can, and must do better.”


Volumes in the Asia-Pacific region declined 1.6 percent in the quarter, defying analysts who had expected an increase, as poor weather and worsening economic conditions hurt beer sales in China. The company said it expects industry volumes to return to growth in the second half of the year.

“The outlook is fairly reassuring,” Eddy Hargreaves, an analyst at Canaccord Genuity, said in a note. “Even ABI has the occasional bad quarter.”

Bloomberg News, edited by ESM