AB InBev’s core profit declines 13.7% in Q1 as Coronavirus closes bars and restaurants

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 7, 2020
  • AB InBev says sales for its drinks including beer were 9.3% down in the first 3 months of 2020.
  • The Belgium company suspends full-year guidance & proposes to cut final divided by 50%.
  • The world's largest beer maker reports its core profit (EBITDA) at £3.20 billion in the first quarter.

In its announcement on Thursday, Anheuser-Busch InBev (EBR:ABI) estimated a more pronounced hit to its Q2 financial performance as Coronavirus continues to restrict people to their homes. The company, however, said that customers are now slowly starting to return in China and South Korea as restaurants and some bars started resuming operations.  

In terms of drinks volumes, AB InBev reported a 46.5% decline in the first 3 months of the year. But the drop contracted to only 17% in April.

AB InBev reports a 9.3% decline in sales

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From January to March, AB InBev said sales for its drinks including beer were 9.3% down as compared to the first 3 months of 2019. In April, however, the decline expanded significantly as governments from across the globe closed restaurants and bars. COVID-19 restrictions, the company added, also weighed on its production at multiple locations.

The world’s largest beer maker has already suspended its full-year financial guidance due to the Coronavirus uncertainty. It also proposed to slash its 2019 final dividend by 50%.

AB InBev reported its core profit (EBITDA) at £3.20 billion in the first quarter that translates to a 13.7% decline versus the comparable quarter last year. The company itself had estimated a 14.7% decline.

The Belgium-based beer manufacturer also highlighted to have lost market share in the U.S as demand for hard seltzer increased. AB InBev said that it is committed to penetrating further into this category.

In its 2nd largest market after the U.S, Brazil, the maker of Stella Artois, Corona, and Budweiser, saw a 10% decline in revenue in 2020 from January to March. The company also expressed plans of expanding its service that will take less than an hour to deliver cold beer to customers from closed venues.

South Africa banned alcohol sales in March

AB InBev’s performance was further impacted by South Africa that banned alcohol sales in late March. Peru also said that the production of beer and its sale will remain suspended until the start of May. As breweries temporarily closed due to Coronavirus, several stores in Mexico also ran out of stock.

At £35.57 per share, the brewer is currently around 45% down year to date in the stock market. Its performance in 2019, on the contrary, was reported fairly upbeat with an annual gain of 25%.

At the time of writing, AB InBev is valued at £60.41 billion and has a price to earnings ratio of 10.22.

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