AB InBev profits surge 50% as SABMiller boosts operations

BELGIUM – The world’s leading brewery, AB InBev has reported a robust growth in its nine-month financials for the period ending September 30 2017, boosted by the former SABMiller operations in key emerging markets and premiumisation efforts.

The brewer, which has been incorporating SABMiller’s business in its operations following its acquisition of its number two rival for US$103 billion a few years ago, reported revenue growth of 3.6% in the third quarter and 4.1% in the nine months of the year.

The company celebrated the closure of SABMiller’s acquisition during the quarter on October 11, 2017.

Total volumes declined by 1.2% in the third quarter and 0.3% in the nine-month period, with strong growth in the markets in Mexico, Argentina, and Africa that offset soft volumes in the US, which was impacted by the strong hurricane period, and Brazil.

Profitability attributable to shareholders surged 50% for the nine-month period to US$5.913 billion from US$3.934 billion in the same period in 2016 while Q3 results almost doubled, increasing 89% to US$2.582 billion in from US$1.363 billion last year, driven by the organic increase in EBITDA and lower net finance costs, partly offset by higher income tax expenses.

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EBITDA increased by 13.8% in quarter three, driven by revenue growth and continued synergy capture, with the margin increasing by 3.53% to 38.9%, while the nine-month EBITDA grew by 10.7% with EBITDA margin expanding by 2.3% bps to 38.0%.

The company’s former SABMiller operations in Africa delivered splendid results, boosting its bottom line, helping the company to deliver improved financial performance in the period.

AB InBev expects an improvement of US$400 million of synergies and cost savings above the US$2.8 billion it expected as of August 2016, rising to US$3.2 billion at the end of 2020.

In South Africa, beer revenues grew by 3.9% in the third quarter, but with a decline in beer volume of 2.5% due to the phasing of inventory levels from the last quarter as price increases were done.

Revenue was up 7.5% and beer volume grew 2.1% for in the nine months.

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“Our high-end portfolio continued to deliver strong growth in Stella Artois and Corona, and we recently began seeding Budweiser into the market to complete our global brand portfolio in South Africa.

Castle Lite performed well this quarter with volumes growing by double-digits, as the brand focuses on growing the in-home consumption occasion heading into the summer season.

Flying Fish also continues to perform extremely well, targeting mixed gender occasions and launching “Flying Fish Chill” in September, the first light flavored beer in South Africa,” the company said in the report.

“In Africa excluding South Africa, own beer volumes grew in the mid-teens, fueled by good growth in Nigeria, Tanzania, Uganda, Mozambique and Zambia,” it added.

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