AB InBev reports full year results as Corona virus outbreak cuts revenue by US$285m

BELGIUM – The world’s largest brewer, Anheuser-Busch InBev (AB InBev) has released its full year 2019 financial results which show a 4.3% increase in revenue benefiting from growth in volume.

AB InBev reported a 3.1% growth in revenue per hl enhanced by global premiumization and revenue management initiatives, although the advancement in the brewer’s smart affordability strategy slightly impacted the growth.

The brewer’s total volumes grew by 1.1% during the year, with own beer volumes up 0.8% and non-beer volumes up 4.8%.

AB InBev reported a 5.2% increase in combined revenues of its three global brands; Budweiser, Stella Artois and Corona, with a 8.0% growth in the global brands outside of their respective home markets.

The company’s EBITDA increased by 2.7% in FY19 to US$21.078 billion as top-line growth and continued cost discipline enhanced by synergy capture was partially offset by elevated cost of sales per hl.

During the twelve months period, the brewer’s normalized profit attributable to equity holders grew to US$8.086 billion form US$6.248 million recorded in the FY18.

The AB InBev board has hence proposed a final dividend of 1.00 EUR per share, subject to shareholder approval at the AGM on 29April 2020.

When combined with the interim dividend of 0.80 EUR per share paid in November 2019, the total dividend for the 2019 financial year will be1.80 EUR per share.

However, the company’s management said that the brewer’s performance in 2019 unsatisfactory and below expectations.

“There were many successes, but we also faced many challenges. We understand that in order to reach our ambitious goals, we need to embrace these challenges head-on and transform them into opportunities for success,” the management said in statement.

Among the major challenges that the company cited include in its cost base –  driven primarily by the highest annual increase in commodity and transactional currency costs in the past decade.

Additionally, the company noted that challenging macroeconomic environments in many of its relevant markets pressured consumer disposable income, resulting in trade-down and consumption contraction.

The impact of the Corona Virus in China has also led to a significant decline in demand in China in both on-premise and in-home channels, AB InBev said.

For the first two months of 2020, the brewer estimate that the outbreak has resulted in lost revenue of approximately US$285 million and lost EBITDA of approximately US$170 million in China.

But still, the Belgian brewer achieved a major milestone in 2019 with the successful completion of the listing of a minority stake of the Asia Pacific business (Budweiser APAC) on the Hong Kong Stock Exchange for US$5.75 billion.

AB InBev says that the listing creates a regional champion in the consumer goods space and an attractive platform for M&A.

The brewer has also been expanding its portfolio through initiatives such as new packaging formats and brands, including beers brewed with local crops as part of its Smart affordability strategy.

For the 2020 outlook, AB InBev said that it expects to achieve an EBITDA growth of 2-5%, with the majority of the growth to be delivered in the second half of the year.

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