Big Beer Is Back as AB InBev, Carlsberg Beat Sales Estimates

By Publications Checkout
Big Beer Is Back as AB InBev, Carlsberg Beat Sales Estimates

Anheuser-Busch InBev, the world's largest brewer, and Danish rival Carlsberg, reported revenue growth that beat estimates, demonstrating an improving European beer market as demand rises for mainstream brands such as Stella Artois and Tuborg.

The beer-makers reported first-quarter revenue growth of 3.7 per cent and 4 per cent respectively, exceeding the 2.8 per cent revenue growth analysts were expecting for both companies. AB InBev shares rose as much as 5.1 per cent, while Carlsberg gained as much as 2.9 percent.

"Europe is definitely picking up for all the beverage alcohol companies as consumer spending is starting to rise in most of the region," said Trevor Stirling, an analyst at Sanford C. Bernstein.

The brewers join Heineken in surprising the market with accelerating growth after struggling against headwinds in Latin America and Russia. AB InBev said western European revenue rose as it gained market share in most markets and U.K. sales rose more than 10 percent, helped by the introduction of Bud Light. Carlsberg reported volume growth in western Europe and a 37 percent gain from eastern Europe, boosted by currency shifts.

The U.S. beer industry is “progressing towards a better place” and Brazil should pick up this year, Chief Financial Officer Felipe Dutra told reporters. Carlsberg expects revenue to grow faster than volume this year, helped by pricing power, according to Chief Executive Officer Cees ’t Hart.

Sales growth of AB InBev’s Stella Artois and Corona brands reached 21 percent and 18 percent, respectively. Revenue at Carlsberg’s eastern Europe division, which is mainly Russia, rose 10 percent, helped by more expensive beers.

AB InBev’s adjusted earnings before interest, tax, depreciation and amortization rose 5.8 percent to $4.81 billion in the first quarter. Analysts expected 3.8 percent growth. Earnings growth excluding Brazil was 12 percent.

The maker of Budweiser is cutting more than 5,500 jobs as it aims to capture $2 billion in cost savings from its acquisition of SABMiller in the next three to four years. The company has already stripped $829 million worth of costs last year after the purchase, which was the brewing industry’s largest ever deal.

The company reiterated its forecast that total revenue growth will accelerate in 2017. Sales rose 2.4 percent last year, held back by a slowdown in Brazil, which suffered its worst recession in decades.

Other highlights of the results:

Carlsberg CEO said he has been in Vietnam three times over the past six weeks to discuss raising its stake in Habeco AB InBev CFO Felipe Dutra says North American growth missed the company’s expectations AB InBev said the comparisons for Brazilian business will be better in the second quarter and later timing of Carnival festival pushed some sales into that period Carlsberg says Indian volume dropped 20 percent in the first quarter and it expects most impact of that country’s ban on alcohol sales near highways in the first half

News by Bloomberg, edited by Hospitality Ireland