AB InBev suffers first core profit decline on Brazil slump

Thu Mar 2, 2017 3:33am EST
 
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By Philip Blenkinsop

LEUVEN, Belgium (Reuters) - Anheuser-Busch InBev, the world's largest brewer, suffered its first decline in core earnings since its formation over a decade ago as recession-hit Brazil depressed beer sales by even more than expected.

The brewer of Budweiser, Stella Artois and Corona, which makes more than a quarter of the world's beer, highlighted difficulties it faces in Brazil, its second largest market, with both lower sales and increased costs due to the weaker real.

The company, which paid nearly $100 billion to take over its nearest rival SABMiller last year, reported its first decline in annual core profit (EBITDA), its key earnings measure, since InBev was founded by the merger of Belgium's Interbrew and Brazil's AmBev in 2004.

AB InBev shares were down 1.7 percent shortly after the opening bell, making them among the weakest performers in the FTSEurofirst 300 index of leading European blue-chip stocks.

Andrew Holland, beverage analyst at Societe Generale, said fourth-quarter earnings missed market consensus at earnings per share level and to a lesser degree for EBITDA.

"We all knew that Brazil was going to be a basket case again because they told us so, it's still even more of a basket case than everyone was anticipating," he said.

AB InBev acknowledged that its market share in Brazil had declined in 2016. Last month, Heineken agreed to buy the loss-making breweries in Brazil of Japanese company Kirin Holdings Co Ltd to become the second largest beer maker there.

AB InBev, now more than double the size globally of nearest rival Heineken after completing the SABMiller deal in October, recognized its performance last year was disappointing and said most of its executive board would not receive bonuses.   Continued...

 
The logo of Anheuser-Busch InBev is pictured outside the brewer's headquarters in Leuven, Belgium February 25, 2016. REUTERS/Yves Herman/File Photo