Bloomberg News

AB InBev Revenue Misses Estimates as U.S. Beer Sales Slide

November 09, 2011

(Updates share price in seventh paragraph.)

Nov. 9 (Bloomberg) -- Anheuser-Busch InBev NV, the world’s biggest brewer, reported third-quarter revenue that missed analysts’ estimates as it sold less beer in the U.S. and central and eastern Europe, offsetting gains in Latin America.

So-called organic sales rose 3.6 percent, the Leuven, Belgium-based company said today in a statement. The median estimate of eight analysts surveyed by Bloomberg was 4.1 percent. The volume of its own brands of beer sold fell 0.6 percent.

“It’s somewhat disappointing on the organic numbers,” Melissa Earlam, an analyst at UBS AG in London, said today. “Having said that, the top-line health driver of volume share in Brazil is up sequentially in September, and we’ve seen share losses in the U.S. abate somewhat.”

Sales in Brazil rose 1.7 percent in the third quarter “helped by a recovery in the industry,” the maker of Stella Artois said, and it had a 69.7 percent market share in the country at the end of September. AB InBev introduced its Budweiser brand into the country, the world’s third-largest beer market, in September, and said sales have so far “exceeded expectations.”

Brazil Spending

The company expects the volume of beer sold to “gain momentum in the fourth quarter” as organic sales in Brazil return to growth. AB InBev expects an increase in the minimum wage and government spending ahead of hosting the 2014 soccer World Cup to help drive sales in the country, it said.

The brewer of Beck’s, which got more than three-quarters of revenue from the Americas last year, has raised prices in the U.S. and shifted toward more expensive products as sales slow. Market share fell 25 basis points in the quarter as the company lost sales in so-called sub-premium brands. The U.S. is the world’s second-biggest beer market after China. The volume of the brewer’s beer sold in North America slid 3.2 percent in the quarter.

AB InBev rose 1.6 percent to 41.55 euros in Brussels. The stock has fallen 2.9 percent this year, compared with a 2 percent decline for nearest rival SABMiller Plc.

Lower Tax Rate

So-called normalized earnings before interest, taxes, depreciation and amortization rose to $3.97 billion from $3.53 billion a year earlier, AB InBev said. That represents organic growth, excluding acquisitions and currency shifts, of 5.5 percent, compared with the average estimate of 7 percent.

AB InBev cut its guidance for annual normalized effective tax rate to 20 percent to 22 percent this year. It sees the rate ranging from 25 percent to 27 percent “in the long run.”

The brewer said Budweiser will be the official beer of the World Cup through 2022 at competitions in Brazil, Russia and Qatar. The company is striving to improve sales of the brand in the U.S. and boost consumption globally. The volume of Budweiser sold rose 6.9 percent in the third quarter, aided by growth in China, the U.K. and Russia.

Cost savings related to the 2008 acquisition of St. Louis- based Anheuser-Busch Cos. were $50 million in the quarter. The company aims to deliver at least $270 million of so-called synergies this year. AB InBev, which was created by the $52 billion takeover of Anheuser Busch by InBev NV in 2008, is “fully committed” to cutting its net debt to Ebitda ratio to 2 times during 2012. The company has $46 billion of debt, according to Bloomberg data.

Schincariol

SABMiller shares soared in October after Brazilian news website IG reported that it was in talks to be bought by AB InBev. Chief Financial Officer Felipe Dutra declined to comment on the report when asked today on a conference call.

Kirin Holdings Co. agreed to buy out shareholders in Schincariol Participacoes e Representacoes this month, completing its biggest acquisition as it seeks growth in emerging markets. The Brazilian beermaker vies with AB InBev in the country.

“Brazil has always been a very competitive markets, it’s one of the most competitive markets we have,” Dutra said. “A global player coming to the market we see as positive, as we believe Schincariol will be more focused than it was.”

--Editors: Sara Marley, Thomas Mulier

To contact the reporter on this story: Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net


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