AB InBev expects Coronavirus emergency to shave 10% of its profit in the first quarter

AB InBev expects Coronavirus emergency to shave 10% of its profit in the first quarter
Written by:
Michael Harris
29th February, 13:15
Updated: 11th March, 08:54
  • AB InBev expects Coronavirus emergency to shave 10% of its profit in the first quarter.
  • AB InBev says Coronavirus crisis cut its revenue by $285 million in China.
  • AB InBev posts a 5.5% decline in its core profit in the fourth quarter versus 1.9% decline expected.

In its announcement on Thursday, Anheuser-Busch InBev (AB InBev) said that it expects a 10% hit to its profit in the fiscal first quarter. The world’s largest brewer also highlighted that beer sales took a massive hit during the New Year in China ascribed to the Coronavirus outbreak that is expected to weigh on the company’s financial performance in the upcoming months as well.

The Corona, Budweiser, and Stella Artois maker said that part of the 10% decline in profit in Q1 may also be attributed to the weaker market in Brazil. In its guidance for fiscal 2020, the company highlighted that it estimates a 2% to 5% growth in core profit this year. Much of the gain, AB InBev added, will be seen in 2020’s second half.  

AB InBev Says Coronavirus Cut Its Revenue By $285 Million In China

According to AB InBev, the health emergency has cut its revenue by $285 million in China in January and February. Diageo’s also warned last week that the rapid spread of the virus across borders is likely to result in a $260 million hit to its profit in fiscal 2020. With nightlife coming to a halt in China due to the Coronavirus crisis, brewers from across the globe have been reporting a significant financial hit in the past couple of months.

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In the morning trade, AB InBev was seen trading 7.5% down at around €57.25 per share in the stock market. It extended the downward rally further on Friday and closed the last week at €50.73 that marks an over 30% decline in 2020 so far. In 2019, however, AB InBev’s performance in the stock market was reported fairly upbeat with an annual gain of around 25%. The stock opened in January 2019 at around €58 per share but closed the year significantly higher at around €73.0 in December. AB InBev currently has a market cap of €84.64 billion.

AB InBev Was Branded The 2nd Worst Performer On The FTSE EuroFirst 100 Index

On Thursday, FTSE EuroFirst 100 analysts branded AB InBev as the second-worst performer on the index. AB InBev’s performance in all three of its primary markets including the U.S, China, and Brazil is currently challenged.

The brewer also accentuated a 5.5% decline in its core profit in the fourth quarter that was recorded at $5.34 billion that came out significantly worse than the market’s forecast of a 1.9% decline in Q4. As per the reports, all except one (in Wuhan) of the 33 Chinese breweries of AB InBev have returned to business.

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