Anheuser-Busch Inbev (BUD) Forecasts ‘Moderate’ Growth in 2019 After 3rd-Quarter Earnings Drop

Press Release

Anheuser-Busch Inbev (BUD), the world’s largest beer maker, forecast “moderate” growth in its full-year gross operating earnings as headwinds it faced in the 3rd quarter were set to continue over the next three months.

Underlying earnings per share that exclude mark-to-market gains linked to hedging of payment programs and the impact of hyperinflation in specific markets slid to $0.94 during the period, from $1.11 a year ago, the group, whose brands include Stella Artois and Budweiser, said in its earnings statement.

The drop in earnings came about despite a 2.7% increase in sales to $13.17 billion from a restated $12.92 billion a year earlier as costs jumped by 6.9% in the quarter and resulted in a margin contraction of 107 basis points in earnings before interest, tax, depreciation, and amortization (EBITDA).

“Bottom-line performance was impacted by the deceleration in top-line growth, a higher cost of sales resulting from significant commodity headwinds, and the year-over-year phasing of our sales and marketing investments, as expected,” after the 2018 World Cup football in Russia, the company said in a statement.

Total volumes were also lower by 0.5% in the quarter as “solid” growth in markets such as Mexico, South Africa, and Colombia was more than offset by declines in China and the US, both primarily driven by “shipment phasing impacts,” the firm said. In addition, price increases in South Korea and Brazil drove volume declines, which were “exacerbated by softer consumer demand in light of difficult macroeconomic conditions.”

Looking ahead to the full-year, the firm expects the cost of sales per hectoliter to rise in “mid-single digits”.

“Overall, we remain confident in our strategy and the fundamental strength of our business, though we now expect moderate EBITDA growth in the full year,” the company said in the statement while noting the “additional headwinds faced in the third quarter will continue into the fourth.”

The group further pointed out that it expected dividend growth in the short term to be “modest given our deleveraging commitments,” which are a year ahead of expectations following the listing of Budweiser APAC in Asia and taking into account anticipated proceeds from the divestment of Australian operations.

This post was originally published on Health Opinion

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