AB InBev’s Q2 sales impacted by a difficult lapping effect 2018 comparison

Global brewer Anheuser-Busch InBev (AB InBev) reported further decline in sales in the second quarter and half-year respectively despite measurable sales growth in key markets around the globe. Revenue fell marginally by 0.21% in Q2 to $13.96bn and by 1.98% to $26.6bn in the half-year, driven by lower volumes in such markets as Argentina  where the consumer remains under pressure due to challenging macroeconomic conditions and in Canada where a weak beer industry persists. Also, the lapping effect of a successful 2018 FIFA World Cup in Russia sponsorship, the company’s largest commercial activation in history weighed on the brewer’s revenue.

Total beer volumes grew 2.1%, driven by strong performances in key markets such as Mexico, Brazil, Europe, South Africa, Nigeria, Australia and Colombia.

In Nigeria, AB InBev saw continued double-digit revenue and volume growth driven by its core portfolio as well as Budweiser in the premium segment. The volume growth continued across other markets in Africa with Tanzania returning to growth in the second quarter with good performance across its portfolio. Beer volumes in Mozambique declined by mid-teens following the effects of a devastating tropical cyclone earlier in the year.

South Africa grew revenue by high single digits despite a continued challenging macroeconomic environment. The growth was helped by a mid-single digit volume growth, which benefitted from the timing of Easter.

In other markets, sales in the United States grew by 1.8% in the second quarter and 1.7% in half-year helped, by premiumisaton of its portfolio and revenue management initiatives. However, mainstream segment contracted in the period.

Mexico delivered double digit growth in both volumes and revenue, boosted by the later timing of Easter despite a strong 2018 comparable.

Europe grew both revenue and volume by mid-single digits, driven by market share gains in all of its major markets and supported by continued expansion in the premium segment.

In Brazil, revenue in Q2 climbed 7.3% on a 3.5% volume lift and 12.3% in half-year on 8% volume growth, outperforming the industry. Sales growth benefitted from premiumisation, which was partially offset by geographic mix.

China saw a 7.1% revenue growth in Q2 and 7.4% growth in half-year, helped by premiumisation and revenue management initiatives.

Profit attributable to equity shareholders of the company in Q2 rose by 14.4% to $2.5bn, from N2.15bn, and by 38.4% to $4.9bn, from $3.6bn in half-year, helped by premiumisation and revenue management initiatives.

AB InBev in early July sought to raise US$9.8bn through an Initial Public Offering (IPO) of its Asian Business Unit known as Budweiser Brewing APAC. By mid-July, the firm cancelled the offering citing “prevailing market conditions”. A week later, it announced a deal to sell its Australian business unit to Japanese brewer, Asahi Group for US$11.3bn, all in an effort to raise cash to start paying down on its $104bn debt from the acquisition of SABMiller in 2016.

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