AB InBev posts impressive first quarter results amid struggles in U.S., Brazil

Anheuser-Busch InBev on Thursday reported a 3.7% revenue growth in the first quarter of 2017 (Jan – Mar) to $12.92bn.The growth was helped by increased volume sales activity in Latin America and Asia as well as revenue management and premiumization initiatives throughout its markets.

It notes that its combined global brands – Budweiser, Stella Artois and Corona grew 12.1% in the quarter. Budweiser revenue grew 7.3%, with 16.4% of that coming from outside of the United States. Stella Artois grew 21.1%, driven mainly by sales in the U.S and Argentina, while Corona by itself returned 18.2% revenue growth, with 48.2% of that growth coming from outside Mexico, particularly in Western Europe and China.

The world’s largest brewer by sales, however, suffered declines in two of its largest markets – United States and Brazil. In the US, Sales-to-retailers (STRs) fell by 1.6% and total revenue in the quarter declined by 2.6%.

While beer volumes for the brewer rose 3.4% in Brazil, revenue per hectoliter declined by 1.8% due to large state tax increases in 2016 that had yet to be passed on to consumers. Moreover, a 40% decline of the Brazilian real (the local currency) to dollar also weighed on the brewer’s earnings as half of its cost of sales in the country is dollar-denominated. The political and macroeconomic environment remains challenging for businesses.

On a brighter note, the brewer saw positive growth outside its biggest markets. Growth in Mexico was driven by healthy performances of its brands in that country such as Victoria and Modelo brands. Revenue per hectoliter rose 4% amid macroeconomic challenges and exchange rate swings.

However, revenue fell in Colombia by 5.1% following a 7.9% volume decline due to VAT increase that went into effect in January, putting pressure on consumers.

The brewer said that Western Europe grew revenue by single-digits, driven by market share gains in majority of its markets and double-digit gains in the UK where Bud Light was introduced. However, it experienced revenue contraction in Eastern Europe caused by volume declines and ban of PET pack sizes above 1.5 litres in Russia.

China delivered strong growth for the beer maker, with sales rising 11% in the quarter; driven by a 5% volume increase and 6% increase through a combination of revenue management initiatives, innovation and brand mix.

South Africa posted strong revenue growth of mid-single digits for the firm, helped by significant pricing increases prior to the changeover. While beer volumes declined 1.6% due to the timing of Easter, cost management initiatives helped lift EBITDA in the higher teens.

In the rest of Africa, the company saw double-digit beer volume gains, with revenue growth recorded in both Nigeria and Uganda. However, it noted that its volumes in Mozambique declined in the single-digits as a result of revenue enhancement initiatives undertaken as a result of devaluation-led inflation. Tanzania and Zambia were also negatively impacted by macroeconomic conditions and their non-beer businesses.

The company said that total net profit for the period grew to $1.41bn, from $132m a year earlier, when its profits was harmed due to financing costs associated with its acquisition of SABMiller.

AB InBev reiterated its outlook that total revenue growth will accelerate in 2017.

One Response to AB InBev posts impressive first quarter results amid struggles in U.S., Brazil

  1. Basil Omozuapo Moses says:

    The double digit growth is an impressive drum up for AB to invest heavily in the Nigerian market. But with the restructuring of Guinness Nigeria imminent and the market biggest boy, Nigerian breweries flexing it muscles, let see how far this growth can continue in the next three years…

Leave a Reply

Your email address will not be published. Required fields are marked *