AB InBev Q1 performance weighed by low consumer demand, Easter timing in key markets

AB InBev reported first quarter sales decline of 3.9% on Tuesday despite posting strong sales growth in key markets around the world. Revenue fell to $12.59bn from $13bn, adversely impacted by lower volumes in markets such as South Africa and Argentina, where the consumer remains under pressure due to challenging macroeconomic conditions.

The later timing of Easter holidays also weighed on the brewer’s results, in markets for which it is an important consumption occasion, including the US, Mexico, Colombia, South Africa and Australia.

Total beer volumes grew by 1.3%, with own beer volumes up 1.0% and non-beer volumes up 4.9%.

However, the company had healthy performances in other key markets, including Nigeria, Brazil, China, the US, Europe and Colombia.

In Nigeria, AB InBev saw continued double digit volume growth, fueled by its core portfolio as well as Budweiser in the premium segment. The volume growth continued across Africa, not including South Africa, and with the exception of Mozambique and Tanzania, with the former impacted by a devastating cyclone and the later held back by the later timing of Easter.

South Africa saw mid-single digits revenue decline due to lower volumes driven by the later timing of Easter, lower consumer demand, in turn driven by a challenging macroeconomic environment and continued segment mix shift toward the premium segment.

Elsewhere, Europe grew revenue by mid-single digits, with broad-based volume growth and market share gains in the majority of markets in which it operates.

Brazil was the best performing market for the brewer, with total revenue growth in the quarter of 16.7%. This was driven by revenue per hl growth of 3.9% and volume growth of 12.4%. The growth was supported by the later timing of Carnival versus the prior year.

The company recorded top-line growth of 1.6% in the U.S, driven by premiumization and revenue management initiatives.

Mexico saw low-single digit growth, helped by favourable brand mix and revenue management initiatives. The company notes that it signed a contract with OXXO, the country’s largest retailer, to begin selling its brands in their 17,000+ stores in order to reach more consumers in more occasions.

The brewer continues to face a difficult macroeconomic environment in Argentina leading to low consumer demand and resulting in mid-teens volume decline. However, sales grew due to revenue management initiatives.

Sales in Canada fell by low single digits, driven primarily by a weaker beer industry and the company’s share performance within the value segment.

China was another strong performer, with revenue growing 7.8%, albeit with a 1.1% volume decline due to the timing of Chinese New Year. Revenue growth was primarily driven by a healthy brand mix and premiumization initiatives.

Profit attributable to equity shareholders of the company rose to $3.57bn, from N1bn in 2018, helped primarily by revenue growth, premiumization and ongoing cost discipline.

Looking forward to the rest of 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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