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BELGIUM: A-B InBev
profits up on weak beer markets 4 March 2010
| Source: just-drinks.com editorial team Anheuser-Busch InBev has reported a rise in full-year profits, but the brewing giant echoed rivals by warning that beer markets are expected to remain weak in 2010. Underlying profits (EBITDA) rose by 16.6% to US$13bn for the 12 months to the end of December, compared to equivalent combined earnings of $12bn for the separate InBev and A-B businesses in 2008, said A-B InBev today (4 March). Price rises masked weak beer volume sales to help the Stella Artois and Budweiser brewer to increase like-for-like net sales by 2.5% in 2009, to $36.75bn. Like-for-like beer volumes fell by 1% for the year, as consumers cut back in the economic downturn, accentuating longer term stagnation in western markets in particular. A-B InBev beer markets will remain weak in 2010 and the first six months of the year will be the most challenging, mainly due to unemployment in the US and a tax hike on beer in Russia. "We expect to show solid operating performance in 2010, but we expect quarter-over-quarter results to strongly skew toward the second half of the year," said the group, adding that it also faces tough cost comparisons against the first half of 2008. At the same time, there will be less opportunity for price rises. Sales per hectolitre are expected to run flat or increase in low single digits over 2010, said the brewer. But, synergies and cost cutting should result in higher EBITDA for the year, it said. The group
said that the InBev acquisition of A-B for $52bn in late 2008 is "essentially
complete", following its deal to refinance debt last month. Separately,
the brewer is facing Europe-wide action by a coalition of trade unions,
upset at the firm's plan to cut 10% of its workforce in Western Europe. Bloomberg AB
InBev Profit Misses Estimates; Earnings Growth Seen Slowing March 04, 2010, 3:40 AM EST By Andrew
Cleary March 4
(Bloomberg) -- Anheuser-Busch InBev NV, the world’s largest brewer, reported
fourth-quarter profit that missed analysts’ estimates and said earnings growth will
slow in the first half of 2010 on a weak U.S. beer market. Earnings
before interest, taxes, depreciation and amortization rose to $3.11 billion, excluding
one-time charges, from $2.81 billion a year earlier, the Leuven, Belgium-based company
said today. That was less than the $3.35 billion median estimate of 10 analysts in a
Bloomberg survey. AB InBev fell as much as 3.9 percent in Brussels trading, the most in a
month. The maker
of Budweiser and Stella Artois increased prices last year to offset higher commodity
costs, while consumers in countries such as the U.S. struggled to contend with the
recession and increased unemployment. The amount of beer sold by AB InBev in the final
quarter of 2009 declined in every region except for northern Latin America, where an
increase in Brazilian beer sales was driven by new product releases. “The
U.S. was getting worse after they put prices up and that impact will continue in 2010,”
said Andrew Holland, an analyst at Evolution Securities Ltd. in London. “The run rate
as they go into the New Year is not great.” Holland has a “neutral”
recommendation on the shares. AB InBev
fell 1.35 euros, or 3.6 percent, to 36.50 euros at 9:22 a.m. in Brussels trading. The
shares have almost doubled in the past 12 months as the company allayed investor concern
over its ability to pay down debt with asset disposals. Slower
Growth The brewer
forecast Ebitda growth will slow to a “low- single-digit” percentage in the
first quarter of 2010 because of “tough” comparisons in the U.S. and the impact
of a tax increase in Russia. Earnings growth will recover to be “progressively higher”
through the rest of the year, it said. “The
environment remains challenging,” Chief Financial Officer Felipe Dutra said on a
conference call. “In the U.S., unemployment remains high, and the young population
has been disproportionately affected by the economic crisis.” The company
expects “modest” volume growth in 2010, Dutra said. Profit growth this year will
be “heavily skewed” to the second half, he also said. The brewer
cut $1.11 billion of costs last year, beating its forecast of $1 billion, by shrinking its
workforce from the U.S. to Europe. AB InBev today didn’t change its target for $2.25
billion of so-called synergies by the end of 2011. Fourth-quarter
revenue rose 3.7 percent to $9.3 billion as the quantity of beer sold by the brewer
unexpectedly increased. So-called organic beer volume rose 1 percent, compared with the
median analyst estimate for a 1 percent decline. Volume for the year fell 0.7 percent on
that basis. Latin
America SABMiller
Plc, the world’s second-largest brewer, reported unchanged beer volume for the final
quarter of 2009. The amount
of beer sold in northern Latin America increased 11.6 percent in the fourth quarter,
boosted by Brazil where the brewer increased its share of the market by 1.2 percentage
points to 68.7 percent, AB InBev said. Western
European beer volume fell 2.6 percent, hurt by a “deteriorating industry” in
Germany and weaker sales at pubs and restaurants in the U.K., the company said. In North
America, where AB InBev generates about 45 percent of earnings, beer volume fell 2.7
percent after the company increased prices in a “softer industry” in 2009. “U.S.
beer remains tough and visibility as to the timing of the recovery is low,” Ian
Shackleton, an analyst at Nomura International Plc, said in a Feb. 26 note. “We
expect to see continued negative momentum for U.S. beer into 2010.” Reduced
Debt In central
and eastern Europe, beer volume fell 9.1 percent, even though AB InBev benefited from
inventory building at Russian distributors ahead of the country’s tripled beer excise
that came into effect from Jan. 1. Asia Pacific volume fell 2.5 percent after the sale of
the company’s Oriental Brewery Co. Ltd. in Korea to KKR & Co. LP last year. Net debt
was reduced to $45.2 billion as of Dec. 31 from $56.7 billion a year earlier, the company
said. That equates to a ratio of 3.7 times Ebitda. The brewer on Feb. 26 said it got $17.2
billion of loans to refinance debt accumulated by acquisitions, pushing back the maturity
date of its borrowings. Fourth-quarter
net income rose to $1.28 billion from $29 million in the year-earlier period. That was
almost double the $671 million median estimate of the analysts. Full-year net income
climbed to $4.6 billion from $1.9 billion in 2008. The
full-year Ebitda margin, a gauge of profitability, widened to 35.5 percent from 30.8
percent in 2008. --Editors:
Paul Jarvis, Celeste Perri. To contact
the reporter on this story: Andrew Cleary in London at acleary7@bloomberg.net.
Bloomberg AmBev Fourth-Quarter Profit
Grows 5.3% on Brazil Beer (Update1) March 04, 2010, 1:51 AM EST (Adds sales
in second paragraph, comment in fourth.) By Laura
Price March 4
(Bloomberg) -- Cia. de Bebidas das Americas, Latin America’s largest brewer, said
fourth-quarter profit rose 5.3 percent on higher sales of beer and soft drinks in Brazil
as the country rebounded from a recession. Net income
rose to 1.79 billion reais ($1 billion), or 2.91 reais a share, from 1.70 billion reais,
or 2.77 reais, a year earlier, AmBev, as the Sao Paulo-based company is known, said today
in a statement on its Web site. Profit beat the 1.74 billion-real mean estimate of eight
analysts surveyed by Bloomberg. Net sales rose 6.5 percent to 6.78 billion reais. Brazilian
beer and soft-drink sales increased in the fourth quarter as disposable income rose among
consumers, Lauren Torres, an analyst at HSBC Holdings Plc, wrote in a research report
dated Feb. 26. The local unit of Anheuser-Busch InBev NV said Feb. 11 it may boost
spending to as much as 2 billion reais this year to expand plants and increase output
capacity as Brazil’s economy continues to grow. “The
domestic market is pretty hot and the company has benefited a lot from drinks consumption,”
Caue Pinheiro, an analyst at SLW Corretora in Sao Paulo, said in a phone interview before
the results were announced. AmBev “has solid results and should maintain its
gross-margin growth. The company has already been showing gains in productivity.” --Editors:
Elizabeth Wollman, James Kraus To contact
the reporter on this story: Laura Price in London at lprice3@bloomberg.net To contact
the editor responsible for this story: Jennifer Sondag in New York at
jsondag@bloomberg.net
AB InBev makes $1.28
billion 4Q profit By AOIFE WHITE BRUSSELS Anheuser-Busch
InBev SA, the world's largest brewer, on Thursday posted a fourth-quarter profit of $1.28
billion, down 20 percent from the previous quarter, and vowed to focus on growing its
business after a tough year of cost-cutting and deleveraging. The maker of
Bud and Stella Artois saw both profit and revenue slip in the three months ending Dec. 31.
It had sales of $9.29 billion, down from $9.76 billion in the third quarter but up nearly
4 percent from $8.96 billion in 2008's fourth quarter The amount
of beer and soft drinks the company sold during the quarter rose 1 percent from a year
ago, when it made a profit of just $29 million. For all of
2009, AB InBev made a profit of $4.6 billion and had $36.76 billion in revenues. Beer
volumes fell 0.7 percent. AB InBev
said in a statement that global demand for beer "remains relatively resilient"
and claimed that it is the market leader in two of the world's most important beer
markets, the United States and Brazil. After a year
of shaving costs, juggling debt in the wake of the financial crisis and offloading units
to help pay for the $52 billion takeover that formed it in July 2008, AB InBev says it is
now back to focusing on growing its core business. "The
integration of Anheuser-Busch is essentially complete," it said, adding that it now
has a "much improved balance sheet" and was not planning to divest any more
parts of the company AB InBev
said it captured $1.1 billion in synergies, or savings from merging the two companies last
year, made $9.4 billion from selloffs, added $787 million working capital and reduced
capital expenditure by $1.5 billion. It said it
managed to extend some $20 billion in outstanding debt and this month obtained $17.2
billion in long-term bank financing to fully refinance the takeover debt. |