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AB InBev Earnings Surge On Savings From SABMiller Takeover

Published on Jul 27 2017 9:10 AM in Drinks tagged: Trending Posts / Beer / SABMiller / AB Inbev / Results

AB InBev Earnings Surge On Savings From SABMiller Takeover

Anheuser-Busch InBev NV, the world’s largest brewer, is widening cost savings from last year’s $104 billion takeover of rival SABMiller at a faster pace than expected, helping the company post second-quarter profit growth that trounced analyst estimates.

Earnings rose 11.8 percent to $5.35 billion on an adjusted basis before interest, taxes, depreciation and amortization, as overlaps from last year’s takeover of SABMiller were eliminated, the Budweiser owner said in a statement Thursday. Analysts expected 7.9 percent growth.

AB InBev cut $335 million of costs in the second quarter, part of an initiative that includes eliminating more than 5,500 jobs to capture $2.8 billion in savings from the acquisition in the next three to four years.

Moving Fast

“We’re not changing the $2.8 billion guidance but we are moving fast in that regard; we like first to deliver and then see what is next,” Chief Financial Officer Felipe Dutra said on a call with reporters. Earlier in the year, the company increased its savings target from $2 billion.

The beermaker said the second half looks “promising” on the back of strong sales in markets such as western Europe and China. The larger brands in AB InBev’s roster such as Corona, Stella Artois and Hoegaarden will drive growth in that period, the company said. AB InBev is also seeking growth from new markets such as Africa, which it bolstered last year through its takeover of SABMiller. In the U.S., the Budweiser maker is devoting $2 billion to boost top brands and improve distribution.

AB InBev shares climbed as much as 4.5 percent in early trading in Brussels.

Beat Estimates

Revenue growth of 5 percent beat estimates and was the highest among major consumer-goods companies such as Coca-Cola Co., Nestle, Danone and Unilever in the second quarter. The results come after AB InBev suffered setbacks in Brazil that heavily damped performance last year, which stripped management of bonuses and set Chief Executive Officer Carlos Brito on a course to improve returns.

“It’s been a painful period for the global beer leader but the worst is over,” Eamonn Ferry, an analyst at Exane BNP Paribas, wrote in a note to investors. “We can look forward to a strong second-half -- AB InBev are back in business.”

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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