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AB InBev Encouraged By June Recovery

Published on Jul 31 2020 12:52 PM in Drinks tagged: AB Inbev / Anheuser-Busch InBev

AB InBev Encouraged By June Recovery

Anheuser-Busch InBev (AB InBev) has said that it is encouraged by a global beer sales recovery in June after suffering a sharp slide in second-quarter earnings and swallowing a $2.5 billion impairment charge in Africa.

Traders and analysts said that better-than-expected second-quarter earnings and the June pick-up are clear positives.

The Budweiser, Corona and Stella Artois maker's sales fell by nearly a third in April as its operations in Mexico, South Africa and Peru shut down and bars closed in most markets.

However, a significant recovery in Mexico and South Africa, year-on-year growth in Brazil and record volumes in China in June resulted in beer sales growth of 0.7% from a year earlier.

"We came out of the quarter with reinforced confidence in the resilience of our business and the global beer category," the company said in a statement.

AB InBev said that it is excited by the reopening of bars, but cautious given renewed restrictions in certain markets and a second ban of alcohol sales from mid-July in South Africa.

The world's largest brewer said that it has conducted a review of the impact of the pandemic on its business. It concluded it risked impairment in Africa and decided to take a $2.5 billion non-cash charge.

Africa was among the crown jewels secured in AB InBev's near $100 billion purchase of nearest rival SABMiller in 2016, although its South African business has struggled, with margins declining by more than six percentage points last year.

"South Africa has been weak for a number of years, but the pandemic appears to have tipped it over the edge," said Trevor Stirling, beverage analyst at Bernstein Securities.

Overall Beer Volumes And Core Profit

The Belgium-based company said that overall beer volumes had fallen by 17% and core profit by 34% to $3.41 billion on a like-for-like basis, which was better than declines of 23% and 36% in a company-compiled poll.

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

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