AB Inbev sees US sales rise as Brazil costs bite
ANHEUSER-BUSCH Inbev, the world’s largest beer maker, just missed first-quarter earnings expectations as the cost of expansion in Brazil offset its first increase in US beer sales in three years.
The maker of Budweiser, Stella Artois and Beck’s said yesterday economic trends were improving in the United States, the world’s most profitable beer market, with unemployment falling and consumer confidence rising.
But it said a one per cent rise in volumes there was largely the result of mild winter weather, and predicted softer US shipments in the second quarter.
“They are saying ‘Don’t get carried away.’ I reckon that flat [US volumes] for the full year would be a good result,” said Andrew Holland, beverage analyst at Société Générale.
Core profit rose 7.4 per cent to $3.55bn (£2.19bn) in the quarter, compared with analyst forecasts of $3.58bn. Revenues increased 3.7 per cent to $9.33bn.
AB InBev, which makes around 90 per cent of its profit in the Americas, is relying on the fast-growing Brazilian market and a policy of price hikes and trading up to premium brands in the United States, where revenues have risen even while volumes have fallen against a tough economic backdrop.
“We see improved trends and market share trends for the brands of our portfolio… We see a market [with] improving overall conditions,” chief financial officer Felipe Dutra told a conference call, referring to AB InBev’s US operations.
The group said a rise in distribution costs in Brazil as it expands, notably in the northeast of the country, pressured profit margins there, along with larger than normal state VAT increases.
AB InBev has almost 50 per cent of the beer market in the United States, the world’s second biggest after China, and nearly 70 per cent in Brazil.