Anheuser-Busch InBev NV, the world’s biggest brewer, reported second-quarter profit growth that beat estimates as soccer World Cup-related beer sales in Brazil helped offset declining sales in the US.
Adjusted earnings before interest, taxes, depreciation and amortisation rose 9.5 per cent on an organic basis to $4.85 billion, the Leuven, Belgium-based company said. That compares with the median estimate of 13 analysts for 8.2 per cent growth.
The brewer, which controls about two-thirds of the Brazilian beer market with brands such as Brahma, got a one-time boost from the tournament, during which it sold gold Budweiser bottles. Chief Financial Officer Felipe Dutra said it’ll be “extremely difficult” to maintain the growth rate in Brazil, though the brewer expects improvements this year there and in the US, its two largest markets.
Brazil organic beer volume advanced 7.2 per cent and 80 per cent of sales were booked in the quarter, while the remainder of lager sales will fall in the third quarter.
World Cup sales were “in line, though not ahead of our expectations,” Dutra said on a conference call with journalists.
Brand Investment
Analysts and investors have speculated that AB InBev could take over its leading competitor SABMiller Plc, the maker of Grolsch and Peroni. Dutra said today that the company’s first priority is to invest behind its brands, though the company will “always be ready to look at opportunities if and when they arise.”
AB InBev is seeking to boost sales and profit with new beer variants such as fruit-flavored Bud Lights, changes in packaging and by pushing more expensive drinks. Dutra declined to elaborate on whether volume will continue to grow at the same pace as the 2.4 per cent reported in the first six months of the year during the second half.
Cost Savings
The company, created by a series of acquisitions over the past decade and slashed another $135 million in costs related to its $20 billion purchase of the rest of Corona-maker Modelo last year. That leaves the company on track to deliver so-called synergies of about $1 billion from that deal by 2016.
AB InBev’s revenue grew 5 per cent on an organic basis and own beer volume edged up 0.5 per cent in the quarter, both measures falling short of what analysts had estimated. The company said it expects revenue increases to offset increased distribution costs this year.
Beer volume rose in Mexico, Brazil and Asia Pacific. US sales to wholesalers fell 3.4 per cent after AB InBev sold more to distributors in the prior period ahead of possible labor action. Sales to retailers slid 1 per cent. The company said share there fell about 65 basis points last quarter, driven mainly by Budweiser.
Bloomberg News, edited by ESM
