Anheuser Busch Inbev NV (ADR)(NYSE: BUD) has reported the adjusted earnings per share of $0.43 in the fourth quarter 2016, much below the analysts’ estimates for the adjusted earnings per share of $1.03. The company had reported the adjusted revenue growth of 1.1 percent to $14.2 billion in the fourth quarter 2016, slightly missing the analysts’ estimates for revenue of $14.4 billion. The revenue per hectoliter grew 3.9 percent due to the lower costs and the sale of more premium beer, while the total beer volume fell 3.3 percent. The beer sales have declined in North America and Europe. As a result, BUD stock lost over 3.9% in the pre-market session (on March 2nd, 2017).
The adjusted earnings before interest, taxes, depreciation and amortization fell to $5.25 billion in the fourth quarter from $5.62 billion a year earlier, missing the analyst expectations. The figures are even weaker than expected, not just in Brazil but also in Mexico and BUD’s two biggest markets of Colombia and South Africa. In addition, the maker of Budweiser, Stella Artois and Corona posted both the weaker sales and higher costs in Brazil, which is struggling to emerge from a two-year recession. BUD faced with a decline in the popularity of its biggest brands in the U.S. and Western Europe.
Going further, BUD expects significant sales volatility in some of its key markets. However, the company expects to grow revenue year-over-year through a combination of global grand growth and new commercial plans. Additionally, the company did not provide any specific profit or sales guidance.
BUD expects to see $2.8 billion synergy and cost savings stemming from its integration with SABMiller, which is up from a prior outlook of $2.45 billion in savings. In October 2016, BUD had completed the combination with SABMiller, making us the first truly global brewer and one of the world’s leading consumer products companies. After this merger, the company could tap new growth in Africa and other emerging markets like Colombia and Peru.
On the other hand, BUD will not pay bonuses to most of its senior management for 2016, including Chief Executive Carlos Brito and Chief Financial Officer Felipe Dutra.
Meanwhile, the peer company Heineken acquired Brasil Kirin Holdings for €664M ($704 million) to make it the second largest beer company in Brazil behind BUD. BUD stock rose over 10% in the last three months (source: Google Finance).