BUD Anheuser Busch Inbev SA NV

By Nick Kostov 

Anheuser-Busch InBev NV, the world's largest brewer, is eyeing further cost savings and won't pay bonuses to its top brass following a weaker-than-expected end to the year on a slump in Brazil.

The brewer said Thursday that savings from its $100 billion-plus megamerger with rival SABMiller will likely reach at least $2.8 billion compared with $2.45 billion previously. This includes $1.05 billion in cost savings SABMiller said it would target before the merger was completed.

AB InBev also said it won't pay bonuses to most of its senior management for 2016, including Chief Executive Carlos Brito and Chief Financial Officer Felipe Dutra.

Adjusted earnings before interest, taxes, depreciation and amortization-- a measure watched closely by investors as a measure of the company's performance--fell to $5.25 billion for the three months ended Dec. 31 from $5.62 billion a year earlier, missing analyst expectations.

The figures were "even weaker than expected, not just in Brazil but also in Mexico and SAB's two biggest markets of Colombia and South Africa," said Trevor Stirling, an analyst at Bernstein.

The maker of Budweiser, Stella Artois and Corona posted both weaker sales and higher costs in Brazil, which is struggling to emerge from a two-year recession. Also faced with a decline in the popularity of its biggest brands in the U.S. and Western Europe, AB InBev completed a merger with rival SABMiller in October, making a huge bet that it could tap new growth in Africa and other emerging markets like Colombia and Peru.

AB InBev said it had already captured $282 million of savings by Dec. 31 and expects $2 billion more within the next three or four years.

The latest quarter is the first time SABMiller's results have been consolidated in AB InBev's figures.

Net profit was $400 million for the three months to Dec. 31, down from $2.29 billion a year earlier, while revenue rose 0.2% to $14.2 billion. Revenue per hectoliter rose 3.9%, helped by lower costs and the sale of more premium beer, while total beer volume fell 3.3%. Beer sales declined in North America and Europe.

Excluding Brazil, Ebitda rose by 6.4% in the fourth quarter.

"It was a tough year but we remain committed to an attractive Brazil market and believe we have the right strategy to get the business back on track," Mr. Dutra said on a call with reporters.

The company's shares dropped 1.8% in early trading.

For 2017, the company expects revenue growth to accelerate. It said it would pay a final dividend of EUR2 a share, bringing the total dividend for 2016 to EUR3.60, in line with previous years.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

March 02, 2017 04:14 ET (09:14 GMT)

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