Anheuser-Busch InBev, the world's largest brewer, reported sales and profit growth that missed analysts’ estimates on weakness in Brazil, one of its top markets.
First-quarter organic revenue rose 3.1 per cent, the Leuven, Belgium-based company said in a statement Wednesday. The median estimate was for a 6.1 per cent advance. The shares fell as much as 4.6 per cent in Brussels, the most since January.
“The weak performance is partly explained by weak emerging-market currencies,” Bryan Garnier analyst Nikolaas Faes said in a note. ABI’s beer volumes were “pretty poor compared to the 7 percent organic volume growth that Heineken reported last month.”
Brazil had its most challenging quarter in many years, AB InBev said, with the company’s beer volume there falling 10 percent. The brewer reiterated its forecast for net revenue in the country to grow by mid-to-high single digits for the year, helped in part by the summer Olympics in Rio de Janeiro.
Tax increases in Brazil, where President Dilma Rousseff is facing impeachment and the worst recession in decades, could see AB InBev increase prices above inflation, Chief Financial Officer Felipe Dutra said on a call. The weak performance in the first quarter was a one-off, he said, with a shrinking economy, high unemployment and low consumer confidence in the country more than offsetting improvements in the U.S. and Mexico.
Reflecting Reality
“Clearly the weak performance is due to the fact that beer consumption is finally reflecting the challenging macroeconomic environment,” Faes said of Brazil.
The brewer reiterated that it expects to close its $108 billion takeover of rival SABMiller Plc in the second half of the year. To satisfy competition regulators, AB InBev is selling some of the target’s beer brands in Europe.
In February, AB InBev forecast organic revenue-per-hectoliter growth ahead of inflation, and flagged a weak first quarter performance in Brazil. U.S. volumes would improve this year, the company also said.
Earnings before interest, tax, depreciation and amortization rose to $3.46 billion on the same basis. Analysts expected $3.74 billion.
News by Bloomberg, edited by Hospitality Ireland
