AB InBev full year profit soars on solid performance of its global brands and revenue enhancing initiatives

AB InBev reported full year surge in profits for the 2017 financial, helped by global premiumization and revenue management initiatives. Profits soared to $8 billion from $4.9bn in 2016.

The beer giant said that the combined revenues of its three global brands – Budweiser, Stella Artois and Corona grew 9.8%.

Total beer volumes increased by 0.2%. The company notes that the business integration with former SABMiller resulted in savings of $1.3bn in 2017, raising cumulative savings so far to $2.1bn of the expected $3.2bn it hopes to capture through synergies.

Revenue for the full year 2017 rose 5.1% to $56.4bn from $45.5bn in the previous year.

Commenting on the results, AB InBev said that “2017 was a transformative year for our company. We are well on our way to achieving our most successful business integration ever and we delivered the best performance in three years. Our reshaped brand portfolio is rising to every occasion to capture future growth.”

On a country-by-country basis, the company said that sales in the United States continued to fall, with revenue declining by 2% in FY2017. In the premium and premium light segments, the company underperformed the industry. Budweiser lost 40 basis points (0.4%), while Bud Light lost 85 basis points (0.85%).

In Mexico, the company delivered solid growth in the mid-single digits, driven by the Victoria brand, Corona and Bud Light.

Brazil which had been a drag on the company’s revenue and profits for several quarters due to a protracted recession recovered with a 5.6% revenue growth, benefitting from revenue management initiatives. However, the company warned that the economic condition remained volatile and is expected to impact first quarter 2018 results due to an earlier carnival and poor weather given lower temperatures and high rainfall.

On the African continent, South Africa delivered a strong boost to revenue with a 6% growth, driven by expansion of its global premium brands of Stella Artois, Corona and Budweiser.

Elsewhere in Africa, volume growth was in the mid-teens in Nigeria, Tanzania, Uganda and Zambia as the company continued to expand its offerings to consumers through both affordability and premiumization.

Western Europe saw top-line growth in the high single-digit and achieving market share gains in the majority of its markets. The UK was a standout, recording double-digit gains, but Eastern Europe continued to struggle, with revenue declines in the low single-digits, blamed on the impact of a ban on large PET bottles in Russia.

China, another big market for the brewer grew by 7.3% as it continues to premiumize.

Looking forward to 2018, the company said it expects to deliver strong revenue growth, driven by solid performance of its brands and strong commercial plans. The company added that it will annouce a set of ambitious Sustainability Goals that will include: clean energy, smart agriculture, water conservation, recyclable packaging as well as safer workplaces and communities.

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