AB InBev Profit Rises but Struggles in Brazil, U.S. Continue -- Update
May 04 2017 - 4:21AM
Dow Jones News
By Nick Kostov
Anheuser-Busch InBev NV, the world's largest brewer by sales,
reported a sharp rise in net profit but said it continued to
struggle in the U.S. and Brazil, its two largest markets.
The maker of Budweiser, Stella Artois and Corona said net profit
surged to $1.41 billion in the three months to the end of March
from $132 million a year earlier. The figure was boosted by the
integration of rival SABMiller following a $100 billion-plus
acquisition, a deal that led to funding costs that hit AB InBev's
year-earlier profit. Revenue in the quarter rose 3.7% on an organic
basis to $12.92 billion.
Shares in the company rose 3% on Thursday morning trading.
Facing a decline in the popularity of its biggest brands in the
U.S. and Western Europe, AB InBev acquired SABMiller last year,
making a huge bet that it could instead tap new growth in Africa
and other emerging markets like Colombia and Peru.
But it has struggled in some of its core markets. In the U.S.,
the brewer said revenue declined as both Bud Light and Budweiser
lost market share, sending core profit lower. Margins increased,
however, as the company's portfolio of more-expensive beers
including Michelob Ultra and Stella Artois performed well.
In Brazil, despite what the company described as a challenging
political and macroeconomic environment, beer volumes rose, but
revenue per hectoliter dropped because large state tax increases
last year haven't yet been fully passed on to customers.
The company said it remains optimistic about Brazil in the long
run and expects the rise in the cost of sales to slow in the second
half of the year.
U.K. sales rose by a double-digit percentage, lifted by the
launch of Bud Light, while the company also posted a strong start
to the year in China, where revenue rose 11%.
"After a period of weak results, this is much better from the
global beer leader," said Eamonn Ferry, an analyst at Exane BNP
Paribas. "The performance was achieved despite a negative drag from
Easter and a weak performance from Brazil, where performance should
pick up materially as we progress through the year."
The company said its full-year expectations remained unchanged,
including an acceleration of revenue growth.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
May 04, 2017 04:06 ET (08:06 GMT)
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