AB-InBev forecasts coronavirus pains

Belgium | The world’s number one brewer expects a 10 percent drop in first-quarter earnings due to the coronavirus. Already, in the last quarter 2019, its EBITDA fell 5.5 percent – on an adjusted basis. De facto, EBITDA was down 12 percent.

The firm reported on 27 February 2020 that in the fourth quarter 2019, EBITDA dropped to USD 5.3 billion from USD 6 billion in the previous year’s quarter.  

Things aren’t going to get any better quickly. Although it is impossible to estimate the full impact of COVID-19 (coronavirus), the brewer has seen a significant decline in demand in China, in both on-premise and in-home channels.  

What is more, demand during the Chinese New Year was lower than in previous years, as it coincided with the beginning of the outbreak.

Coronavirus impact

AB-InBev estimates that in the first two months of 2020 the coronavirus epidemic has resulted in lost revenue of more than USD 280 million and lost EBITDA of approximately USD 170 million in China.

For a while, AB-InBev had to close its 33 Chinese breweries. “In the meantime, half are open again,” Budweiser APAC said. “We were also allowed to open the other breweries, except those in Wuhan,” the Hong Kong listed firm added.

Still, AB-InBev expects Chinese consumers to resume their normal lives in the second quarter this year, once the lockdown is lifted by the authorities.  

All bets on second half of 2020

AB-InBev forecasts that group profit for the full year 2020 should rise between 2 percent to 5 percent, with most of the growth probably achieved in the second half of the year.

On a separate note, Diageo, the world’s number one drinks company, has warned that the coronavirus outbreak could knock as much as GBP 200 million (USD 257 million) off its profits this year.