AB InBev cuts 2019 final dividend by 50% due to Coronavirus uncertainty

Anheuser-Busch InBev (EBR:ABI) announced to have delayed its annual shareholder meeting on Tuesday. Owing to the rising uncertainty due to the Coronavirus pandemic, the world’s largest brewer also proposed to cut its final dividend by 50%.

AB InBev is world-renowned as a manufacturer of Stella Artois, Corona, and Budweiser. On Tuesday, the Belgium-headquartered multinational drink and brewing company said that it plans on reducing its final dividend for 2019 to 44 pence per share. Before the outbreak, the company had proposed a higher 88 pence per share of final 2019 dividend.

In November, the interim dividend that AB InBev paid was 70 pence per share.

Cutting Dividend Will Save £870 Million For AB InBev

AB InBev’s statement on Tuesday also highlighted that cutting the 2019 dividend will roughly save £870 million for the company. The move will also contribute to relieving its debt burden ascribed to the SABMiller purchase of 2016 for around £80 billion.

At the end of last year, AB InBev recorded its net debt at £76.32 billion.

The brewer also saw it fit to delay the annual shareholder meeting due to the ongoing health crisis to June 3^rd. Originally, the meeting was scheduled for April 29^th. As a result, final dividend payments will now also be delayed until June 11^th. The company had previously planned on making the dividend payments in the first week of May.

As of Wednesday, the flu-like virus has infected more than 2 million people worldwide and the death toll has surpassed 125,000. Citing the rising uncertainty associated with the pandemic, AB InBev had withdrawn its full-year financial guidance for 2020 in late March.

AB InBev’s Performance In The Stock Market

In February, the Belgium-based brewer had warned that its core profit (EBITDA) is likely to take a 10% hit due to the pandemic in the first quarter while a 2% to 5% annual decline is also expected.  

At the time of writing, AB InBev is exchanging hands at £37.25 per share that translates to a more than 40% decline in 2020 so far. On March 18^th, the stock dropped to as low as £27 per share. Its performance in 2019, on the contrary, was reported moderately upbeat with an annual gain of around 20%.

AB InBev currently has a market cap of £62.90 billion and a price to earnings ratio of 10.82.