Anheuser-Busch InBev (AB Inbev) on Thursday warned that the coronavirus in China chewed on its sales in the first two months, despite the increase in global volume growth on premiumisation and management initiatives. Photo: Francois Lenoir
Anheuser-Busch InBev (AB Inbev) on Thursday warned that the coronavirus in China chewed on its sales in the first two months, despite the increase in global volume growth on premiumisation and management initiatives. Photo: Francois Lenoir

Coronavirus hits brewing giant AB InBev sales, losses estimated at $285 million

By Edward West Time of article published Feb 28, 2020

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CAPE TOWN – Anheuser-Busch InBev (AB InBev) on Thursday warned that the coronavirus in China chewed on its sales in the first two months, despite the increase in global volume growth on premiumisation and management initiatives.

The group said the outbreak resulted in lost revenue of about $285 million (R4.34 billion) and earnings before interest, tax, depreciation and amortisation (Ebitda) of about $170m in China.

It said Ebitda was expected to decline by about 10 percent in the first quarter of 2020 and off a high base in the first quarter of 2018.

AB InBev said Ebitda for 2020 was now anticipated to grow 2 percent to 5 percent, with the majority to be delivered in the second half of the year.

“Our performance in 2019 was below our expectations, and we are not satisfied with the results,” chairperson Marty Barrington and chief executive Carlo Brito said in a note to shareholders.

“There were many successes, but we also faced many challenges. To reach our ambitious goals, we need to embrace these challenges head-on and transform them into opportunities.”

The group said it faced significant headwinds on its cost base driven mainly by the highest annual increase in commodity and transactional currency costs in the past decade which held back the Ebitda.

It said revenue grew by 4.3 percent in the year, and by 2.5 percent in the fourth quarter.

Combined revenues of our three global brands, Budweiser, Stella Artois and Corona, grew 5.2 percent in the year, and by 2.1 percent in the last quarter.

Cost of sales increased by 7.4 percent in 2019. In the fourth quarter cost of sales increased 9.1 percent.

Ebitda increased 2.7 percent to $21.1bn, as top-line growth and cost discipline was partially offset by higher cost of sales.

Net finance costs were $4.4bn compared to $6.8bn in the 2018 financial year.

Normalised earnings per share in 2019 was $0.48 in the fourth quarter, a decrease from $0.71 in the fourth quarter of 2018.

A final dividend of 1 (R16.56) per share was proposed, bringing the payout for the 2019 year to 1.80.

“We have made significant advances in elevating our core brands by segmenting core lagers into easy drinking lagers and classic lagers, which have different liquid profiles and cater to different consumption occasions strengthening the relative positioning of each brand,” Barrington and Brito said.

Currently, 31 percent of the salaried workforce were women, three percentage points up since 2016, with 22 percent female representation among group partners, up 5 percent since 2016.

The group said fourth quarter total volumes increased by 1.6 percent, with own beer volumes up 0.8 percent and non-beer volumes up 8 percent.

“We know we have gaps to fill and are working to advance our progress. In 2019, 36 percent of the new hires in our salaried workforce were women,” the group said.

ABInBev shares closed 7.36 percent lower at R940.90 on the JSE on Thursday.

BUSINESS REPORT

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