AB InBev (BUD) Q1 Earnings Miss, Sales Beat on Strong Volume
Anheuser-Busch InBev SA/NV BUD,
alias AB InBev, reported mixed first-quarter 2019, wherein earnings
missed estimates but sales beat. Additionally, the bottom line
improved year over year and sales declined from the prior-year
quarter. This marked the company’s third straight earnings miss
while revenues surpassed estimates for the second consecutive
quarter.
Notably, the company delivered negative earnings surprise in four
of the last six quarters while the top line beat estimates in five
of the trailing six quarters.
Overall, shares of AB InBev have surged 15.2% in the past three
months, outperforming the industry’s growth of 9.8%.
Q1 Highlights
Normalized earnings per share of $1.27 increased 74% year over year
from 73 cents in the year-ago quarter. However, the bottom line
missed the Zacks Consensus Estimate of $1.50. Earnings gained from
improving trends in key markets and continued premiumization in
majority of the markets, partly negated by adverse currency
translations.
Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise
Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise | Anheuser-Busch InBev SA/NV Quote
Revenues declined 3.9% to $12,589 million but
marginally beat the Zacks Consensus Estimate of $12,550 million.
Moreover, the company registered organic revenue growth of 5.9%,
courtesy of 4.6% rise in revenues per hectoliter (hl) and strong
volume growth. Top-line results were also aided by global
premiumization and ongoing revenue management initiatives. Further,
healthy performances in key markets, including Brazil, China, the
United States, Europe, Colombia and Nigeria boosted the top
line.
Total organic volume advanced 1.3%, with own-beer volume rising 1%
and non-beer volume up 4.9%.
Consolidated revenues at the company’s three global brands —
Budweiser, Corona and Stella Artois — improved 8.5% globally and
14% outside their respective home markets.
The cost of sales declined 2.5% year over year to $4,875 million
but increased 6% organically. Further, the cost of sales per hl
grew 4.6%.
The company’s normalized earnings before interest, taxes,
depreciation and amortization (EBITDA) was $4,989 million, which
dropped 2.7% year over year but improved 8.2% on an organic basis.
EBITDA margin expanded 50 basis points (bps) to 39.6% while it
increased 86 bps organically. This increase was driven by organic
sales growth, robust brand mix, premiumization, ongoing cost
discipline and synergy capture from the SAB merger. This was partly
negated by significant commodity and currency headwinds.
Outlook
AB InBev reiterates the encouraging guidance for 2019. The company
anticipates delivering strong top-line and EBITDA growth for the
year, backed by solid brand performance and robust commercial
plans. Driven by increased focus on category development, it
expects to deliver balanced top-line growth between volume and
revenue per hl. Net revenue per hl growth is likely to exceed
inflation while costs (sum of cost of sales and SG&A) are
expected to come below inflation. Premiumization and
revenue-management initiatives are likely to aid revenue per hl
growth.
The company projects cost of sales per hl to increase in a
mid-single digit, with currency and commodity headwinds to be
offset by cost-management initiatives.
Further, this Zacks Rank #3 (Hold) company reiterated synergy and
cost-saving guidance at $3.2 billion that was announced in August
2016. Of this, nearly $547 million was reported by SABMiller as of
Mar 31, 2016, and about $2,491 million was captured between Apr 1,
2016, and Mar 31, 2019. The company expects to achieve remaining
synergies of nearly $150 million by the end of 2019.
For 2019, management anticipates normalized effective tax rate of
25-27%. Net capital expenditure is projected between $4 billion and
$4.5 billion. AB InBev envisions dividend growth to be modest in
the near term due to increased importance of deleveraging. However,
dividends are likely to grow gradually in the long term.
Three Better-Ranked Stocks in the Beverage
Industry
Ambev S.A. ABEV has a long-term earnings growth rate of 7.2% and a
Zacks Rank #2 (Buy) at present. You can see the complete
list of today’s Zacks #1 Rank (Strong Buy) stocks
here.
PepsiCo Inc. PEP currently has a long-term earnings growth rate of
7.2% and a Zacks Rank #2.
New Age Beverage Corporation NBEV, also a Zacks Rank #2 stock,
witnessed positive estimate revisions for the current year in the
last 30 days.
Radical New Technology Creates $12.3 Trillion
Opportunity
Imagine buying Microsoft stock in the early days of personal
computers… or Motorola after it released the world’s first cell
phone. These technologies changed our lives and created massive
profits for investors.
Today, we’re on the brink of the next quantum leap in technology. 7
innovative companies are leading this “4th Industrial Revolution†-
and early investors stand to earn the biggest profits.
See the 7 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free
report
Ambev S.A. (ABEV) : Free
Stock Analysis Report
Anheuser-Busch InBev SA/NV
(BUD) : Free Stock Analysis Report
Pepsico, Inc. (PEP) : Free
Stock Analysis Report
New Age Beverage
Corporation (NBEV) : Free Stock Analysis Report
To read this article on
Zacks.com click here.
Zacks Investment Research