- Third-quarter revenue increased by 5.0% organically to $15.6bn
- Underlying operating profit of $4.0bn, up 2.7%
- North American revenue and volumes declined 12.7% and 17.1% respectively
- Full-year profit guidance maintained
Aarin Chiekrie, equity analyst at Hargreaves Lansdown:
“It’s not just ghosts and trick-or-treaters giving investors a fright this Halloween. AB InBev’s in a tricky spot as its third-quarter results lapped some tricky comparable numbers. The top line did move higher, but this was driven entirely by price hikes as volumes continued to struggle, falling more than markets were expecting. Unfavourable weather conditions over Europe’s summer months soured beer demand in the region. In the group’s largest market, North America, performance was very underwhelming as volumes declined at double-digit rates. The fallout from the controversial and poorly received marketing campaign on Bud Light hasn’t helped matters on this front. The only good news here is that the worst of the fallout should be behind AB InBev now. Bud Light sales look to have bottomed out, rebasing around 30% lower which provides plenty of room for growth in future periods.
Under the hood, margins got squeezed slightly across most regions. Increased marketing spending was a big factor in this as AB InBev aims to repaint its image in the minds of consumers. Since the quarter-end, a multi-year deal’s also been struck to plaster the Bud Light logo around the UFC’s octagon again, with some sources reporting the deal to be worth around $175m. And rather unexpectedly, a $3bn tender offer for its bonds and a $1bn buyback has been announced, indicating the group expects to finish the year with its leverage ratio below the all-important 3.0x target. Coupled with the inflationary accounting benefits of low-quality hyperinflationary sales in Argentina, AB InBev’s managed to maintain its full-year guidance with cash profits (EBITDA) expected to grow in the 4-8% range.”
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