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AB InBev Fourth-Quarter Profit Beats Estimates

Published: March 8, 2012 | 10:25 am
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Anheuser-Busch InBev NV (ABI), the world’s biggest brewer, reported fourth-quarter earnings that beat analysts’ estimates aided by an improvement in sales of its flagship Budweiser brand.
So-called normalized earnings before interest, taxes, depreciation and amortization rose to $4.2 billion from $3.9 billion a year earlier, the brewer of Stella Artois said today. The median estimate of 14 analysts surveyed by Bloomberg News was $4.1 billion.
Fourth-quarter revenue rose to $9.87 billion. Excluding acquisitions, sales growth was 5.7 percent, less than the 6.2 percent median estimate of 12 analysts surveyed by Bloomberg. Total volumes decreased 0.6 percent in the quarter.
“Like-for-like sales growth was mostly in line, with very strong pricing and profit margins above expectations, but volumes disappoint,” Pablo Zuanic, an analyst at Liberum Capital, said in a note to clients. “In general, the company’s top-line commentary for 2012 sounds positive.”
AB InBev rose 2.7 percent to 52.25 euros as of 9:37 a.m. in Brussels, bringing the gain this year to 10.6 percent.

U.S., Brazil

The brewer, based in Leuven, Belgium, gets most of its sales from its North America and Latin America North units, encompassing the U.S. and Brazil, the world’s second- and third- largest beer markets globally by value. It’s been suffering as high levels of unemployment in the U.S. cut beer drinking.
The volume of beer sold in North America slid 4.5 percent in the fourth quarter as a price increase in October crimped sales. U.S. sales in the first two months of 2012 have been “very encouraging,” aided by improving consumer confidence and a better-than-expected roll out of Bud Light Platinum, Chief Financial Officer Felipe Dutra said in a conference call with reporters today.
Consumer confidence held close to an almost four-year high at the end of February as pessimism about the performance of the economy eased, according to the Bloomberg Consumer Comfort Index. The U.S. labor-market recovery has accelerated, with employers adding 1 million workers to payrolls since July.

Bud Share

Budweiser’s share of the U.S. market dropped, while the rate of decline fell 50 percent over the course of the year, the company said. Dutra declined to predict when Bud’s share losses would end. Michelob Ultra gained market share, the brewer said.
“Bud Light Platinum is on fire, and they want to get that brand out there, so their attention won’t turn to Bud until later in the year,” Trevor Stirling, an analyst at Sanford C. Bernstein in London, said in a phone interview today.
AB InBev said last year it extended its sponsorship of the soccer World Cup through to 2022 as it seeks to push its Budweiser brand globally. Budweiser volumes increased 3.1 percent globally last year, compared with 1.7 percent growth in 2010, fueled by sales in China and Canada.
The company started selling Budweiser, acquired when InBev NV bought Anheuser-Busch Cos. in 2008 in a $52 million transaction, in Brazil last August as it aims to tap increasingly wealthy consumers with a taste for international beers. The company unveiled Bud in Russia in 2010.
“We are particularly pleased with Bud’s performance,” Dutra said on the call.

China Acquisitions

Volume at the Latin America North unit rose 0.6 percent as beer grew 1.2 percent and soft drinks fell 0.9 percent. An increase in Brazil’s minimum wage should boost sales this year, with growth of as much as 5 percent in the first quarter, the executive said.
Dutra also said the company might pursue more bolt-on acquisitions in China, after buying two Chinese brewers last year. Beer volumes in China increased 6.1 percent in the fourth quarter, excluding the impact of those acquisitions, helped by sales of Budweiser and Harbin, the company said.
“The big four breweries still have less than 60 percent of the total market in China, so there is still lots of room for consolidation,” Stirling said in the interview.
AB InBev said it will pay a gross dividend of 1.20 euros, up from 80 cents a year earlier. The company expects to boost its dividend yield to a range between 3 percent and 4 percent, compared with its current yield of just under 3 percent, Dutra said. Fourth-quarter net income rose to $1.9 billion from $968 million a year earlier, the company said.

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