AB InBev posts weak results amid low consumer demand, hedging losses


AB InBev on Thursday reported a 15% decline in profit for the full year 2018, to $6.8bn. The brewing giant put the blame on consumption contraction in key markets – Brazil, Argentina, United States and South Africa as well as hedging losses linked to its share-based payment programs.

The company said that total beer volumes fell by 7.43%, although combined revenues of its three global beer brands – Budweiser, Stella Artois and Corona grew by 9%.

Full year revenue declined by 3% to $54.6bn from $56.4bn in 2017.

In Nigeria, growth accelerated following the opening of its new Sagamu brewery mid-year 2018 to meet demand, with revenue growth of 50% in the fourth quarter and 25% growth in the full year. Revenue growth was driven by double-digit beer volume growth and continued share market gains. Earnings before interest, taxes, depreciation and amortization (EBITDA) margins expanded by more than 2,000 basis points (20%) in the fourth quarter as a result of the alleviation of capacity constraints and Budweiser’s entry into the premium segment.

In South Africa, VAT increase in April coupled with numerous petrol price increases and rising unemployment levels had a negative impact on consumer disposable income and thus affected beer sales. Revenue for the year was flat.

Elsewhere in Africa, the brewer saw significant “own beer” volume growth of more than 20% in Zambia and double digit volume growth in Mozambique with record high market share gain in the fourth quarter. However, it notes that beer volumes were flat in Tanzania and down by mid-single digits in Uganda due to capacity constraints and challenging macroeconomic environment.

The United States saw marginal revenue decline of 0.7%, weighed by commodity headwinds and higher distribution expenses related to a tighter US freight market.

The company notes that Mexico was its best performing market in 2018 in both revenue and profit, driven by volume growth, resulting in a market share gain of 6% and low double digit revenue growth.

Colombia saw 8.4% revenue growth, driven by 3.2% volume growth. The company said that it continues to drive premiumization in the Colombian market, supported by its global brand portfolio which grew by more than 75% in the period, led by Budweiser and local brand Aguila.

Brazil saw a 1.7% revenue growth, with total beer volumes declining 4.4%, negatively impacted by low consumer demand in the context of challenging macroeconomic environment.

In China, revenue grew by 8.3%, with premiumization driving revenue.

Canada suffered single digits decline, driven primarily by a weaker beer industry, while Argentina saw low single digits volume decline caused largely by low consumer demand as a result of challenging macro-economic conditions.

Europe grew revenue by the low single digits, driven by both premiumization and volume growth and helped by the combined double-digit revenue growth in the UK and Spain, supported by higher volumes.

Looking forward to 2019, the company said it expects to deliver strong revenue and EBITDA growth, driven by the solid performance of its brand portfolio and strong commercial plans.

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