AB InBev Forecasts Higher 2021 Earnings, But Sees Hit To Margins

By Steve Wynne-Jones
Share this article
AB InBev Forecasts Higher 2021 Earnings, But Sees Hit To Margins

Anheuser-Busch InBev has forecast 'meaningfully' better 2021 earnings after sales in Brazil and Mexico and a large tax credit inflated profits of the world's largest brewer at the end of 2020.

The maker of Budweiser, Stella Artois and Corona predicted increased drinking and higher prices as countries emerge from the COVID-19 pandemic.

However, it saw higher costs from buying dollar-denominated commodities such as barley and aluminium in the Brazilian real and other local currencies, and from a pandemic-driven shift to more consumption at home.

Carlsberg, the world's third-largest brewer, said earlier this month it was banking on most COVID-19 restrictions being lifted to buoy summer earnings. Heineken, the global number two, was more cautious as it announced 8,000 job cuts to restore margins.

EBITDA Performance

AB InBev said earnings before interest, tax, depreciation and amortisation fell 2.4% to $5.07 billion in the fourth quarter.


That was above an average market forecast of $4.8 billion, but was boosted by a tax credit in Brazil. Excluding this, the profit fall was worse than the average 1.0% decline expected in a company-compiled consensus.

Overall, margins were squeezed by a shift to the higher-priced single-use cans used for at-home drinking from cheaper reusable kegs and returnable glass bottles used in bars and restaurants, as well as higher freight rates.

In Brazil, AB InBev's second largest market, the company sold 11.9% more beer in the fourth quarter than a year earlier, with nearly a third of the population benefiting from the government's "corona voucher" payments.

AB InBev gained market share in Mexico from rival Heineken as its brands became available in OXXO, the country's largest convenience store chain. Sales rose after a two-month government-enforced shutdown of brewing operations.


In Europe, the Middle East and Africa, beer volumes fell 6% due to lockdowns, although AB InBev said it did increase market share in France, Germany and the Netherlands.

Earnings grew slightly in South Africa, although the company warned that a third national alcohol ban that lasted a month from December 29 would hit first-quarter results.

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

Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.