Rising Prices Weigh On AB InBev Regardless of Increased Beer Gross sales

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BRUSSELS: Anheuser-Busch InBev, the world’s largest brewer, scrapped its interim dividend and mentioned quarterly earnings dipped on Thursday because the shift to ingesting at house pushed up its prices.

The maker of Budweiser, Stella Artois and Corona lagers loved a shock rise in gross sales however earnings declined barely after the pandemic compelled customers to shift from ingesting out to purchasing extra of their beer in shops.

This pushes up prices as a result of AB InBev wants to provide and ship extra packaging and single-use cans and bottles and fewer of the cheaper kegs and returnable glass bottles utilized in bars and eating places.

The world’s second largest brewer Heineken mentioned on Wednesday it confronted an analogous value concern.

AB InBev gave no particular monetary steerage for 2020, however expects the second half of the yr to be higher than the primary, albeit with appreciable uncertainty because of the pandemic.

Total beer and tender drink volumes rose by 1.9% within the June-September quarter after a 17% slide within the second quarter to drive income up 4.0%, in opposition to consensus expectations of a 4% decline.

AB InBev shares have been buying and selling up 1.6% at 0925 GMT, with its largest markets recovering and exhibiting no imminent indicators of lockdowns.

In contrast to rival Heineken, solely a small proportion of the corporate’s enterprise is in Europe, the place COVID-19 restrictions are tightening most.

BRAZIL SHINES

AB InBev’s clear outperformer was Brazil, the corporate’s second largest market, the place beer gross sales shot up 25% from a yr earlier with authorities subsidies propping up client demand for its premium and new beers.

Volumes and earnings additionally grew in its largest market, the USA, as its Michelob Extremely lager and exhausting seltzers offset a decline of mainstream manufacturers to extend its share of nationwide beer gross sales.

The Belgium-based firm additionally reported development in Mexico, Europe and China, however suffered declines in Colombia, the place stay-at-home restrictions solely eased in August, and South Africa, the place alcohol gross sales have been banned for a month.

Nonetheless, earnings earlier than curiosity, tax, depreciation and amortisation solely dipped by 0.8%, a far milder decline than the typical forecast of a 9.3% drop in a company-compiled ballot. EBITDA fell by a 3rd within the second quarter.

The corporate mentioned uncertainty and market volatility meant it might not pay an interim dividend this yr after a payout of 0.80 euros per share in 2019.

Earlier this yr, it additionally halved its closing dividend for 2019 to 0.50 euros.

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