AB-InBev blames it on the weather
Now we all know why AB-InBev is so keen on closing the Modelo deal: Corona beer is expected to bring home the bacon as the world’s number one brewer is facing declining volumes in its most important markets.
On 30 April 2013 AB-InBev reported that volumes in most markets, except for China, had fallen in the first quarter. Overall beer sales were down 4.1 percent in the first quarter 2013.
Beer volumes in Brazil, one of its key markets, declined by 8.2 percent while there was a fall of 5 percent in North America.
"Consumers continue to be under short-term pressure in Brazil and so we have adjusted our commercial plans," the brewer said in a statement. It added that the poor results of the quarter were due to an early Carnival, high food inflation and bad weather.
The company also blamed the weather in the U.S. for its volume slump there. Tight purses because of the economy and higher gas prices also contributed to the problems, it said.
Much of Europe suffered from a prolonged winter which sent volumes down 7 percent in the region, and by as much as 9.1 percent in its home market of Belgium.
Media report that the situation in Russia was "close to catastrophic" as the beer volume decline there stood at 17 percent year-on-year.
Fortunately, China delivered a piece of good news. Volume sales were up 15.5 percent in the quarter.
AB-InBev said that it now expects beer volumes in 2013 to be "either flat or down low single-digits" compared to 2012. That’s an even more sobering outlook than Heineken’s. The number three brewer said on 24 April 2013 that sales volumes and revenues would grow this year, but probably at rates lower than in 2012.
Fortunately, on the profit-side of things, AB-InBev’s first quarter results don’t look all that bad. Net profit rose to USD 2.05 billion from USD 1.67 billion a year earlier, helped by hedging gains related to the Modelo deal. However, revenues fell to USD 9.17 billion from $9.33 billion because of a weaker dollar even as AB-InBev pushed through price increases, it was reported.
Alas, AB-InBev’s EBITDA fell to USD 3.43 billion from USD 3.56 billion.
No wonder, AB-InBev will be relieved when the Modelo transaction will finally be completed.
