AB-InBev’s third quarter results disappoint analysts
The world’s number one brewer reported unsatisfactory third-quarter results with beer volumes dropping 1.2 percent to 161 million hl. Shareholders will take some comfort from management’s announcement that cost savings from the USD 104 billion SABMiller acquisition will be USD 400 million higher than the originally estimated USD 2.8 billion. The USD 3.2 billion savings will be delivered within the same four-year period, which is by October 2020.
Although AB-InBev’s profits (EBITDA) rose 13.8 percent in the third quarter to USD 5.73 billion and there was organic growth in revenues of 3.6 percent to USD 14.7 billion, analysts still complained that these positive results were not good enough.
In their view, AB-InBev dismal earnings trend persisted in the third quarter 2017 as the bottom line lagged estimates for the seventh straight quarter. Moreover, revenues missed their estimate for the second consecutive quarter.
No doubt, the situation in the US is still grim. In its biggest profit pool revenues were down 5.6 percent. Third quarter volumes in North America fell 6.2 percent, partly because of the disruption caused by hurricanes in Florida and Texas. Making matters worse is the continuing market share loss for both Budweiser and Bud Light. AB-InBev’s US market share declined by nearly one percent in the quarter.
In Brazil, its second most important market, the “industry is still in recovery”, said AB-InBev, reporting a 5.5 percent drop in beer volumes. But it was “cautiously optimistic” about the economy and said revenues grew 8.7 percent, thanks to sales of more expensive beers.
Meanwhile, AB-InBev has begun to sell Budweiser in South Africa as well as Stella Artois and Corona Extra. These brands were delivering “strong growth”, the company said.
