AB-InBev cuts its dividend – again

Belgium | AB-InBev has halved its 2019 final dividend to EUR 0.50 per share in order to save about EUR 1 billion (USD 1.1 billion). The 2019 total dividend came to EUR 1.30 (or EUR 2.6 billion for all shares outstanding) after EUR 1.80 in 2018.

As the coronavirus pandemic has forced governments to shutter breweries (previously China, now Mexico and South Africa) and the on-premise, causing beer consumption to drop, AB-InBev, Heineken and Carlsberg have withdrawn their earnings outlook for 2020.

Shares tumble

When AB-InBev first had to slash dividends in half in 2018, investors were shocked and AB-InBev’s market value plunged by USD 18 billion.

Not so this time. But that may be because AB-InBev’s share price has already nosedived since the beginning of the year. Between January and the end of March it lost 46 percent in value, exacerbated by AB-InBev reporting lacklustre annual results at the end of February. In 2019, AB-InBev’s global sales volumes rose just 1 percent.

The downward trend continued in March, when AB-InBev’s stock dropped 20 percent, thus underperforming the S&P 500 index, which only declined 12.5 percent.

More bad news?

Observers are waiting for AB-InBev’s first quarter 2020 results, which the brewer will report on 7 May.

Meanwhile, Heineken has said (8 April) that it believes beer sales to have fallen by 2 percent in the first quarter and overall volumes, including cider and soft drinks, by 4 percent. It also warned that the covid-19 impact will be worse in the second quarter. Heineken will provide more information in its first quarter trading update on 22 April.