Belgium: AB InBev Reports Revenue Growth Despite US Performance Offset

AB InBev, the world's leading beer company, announced its second-quarter 2023 financial results, reporting continued global momentum with high-single-digit revenue growth. However, the performance in the US market partially offset the positive results.

Michel Doukeris, the CEO of AB InBev, expressed his satisfaction with the quarter's profitable growth and emphasized the company's commitment to long-term strategic priorities.

In the second quarter of 2023, AB InBev witnessed a remarkable 7.2% increase in total revenue. This growth was driven by a 9.0% surge in revenue per hectoliter (hl). The half-yearly results were equally impressive, with total revenue up by 10.0%, bolstered by a revenue per hl growth of 10.6%.

These numbers are much better than those of Heineken, who also released their half-yearly results today, reporting a comparatively modest increase of +6.3%. (, 3.8.2023)

Upon closer examination, however, AB InBev’s figure must be put into perspective: The brewing group cannot avoid admitting that the current hyperinflation in Argentina distorts the numbers. Excluding the Argentine business, AB InBev’s global revenue growth would be only 6.7%.

The company's global brands, including Budweiser, Stella Artois, and Corona, experienced a combined revenue increase of 18.4% outside their respective home markets during the second quarter. This trend continued through the first half of the year, with a 16.9% growth in combined revenues. AB InBev's aggressive digital presence played a pivotal role in driving revenue, with approximately 64% of revenue coming from B2B digital platforms, and the monthly active user base of their BEES platform reaching an impressive 3.3 million users. The company's digital direct-to-consumer ecosystem generated over 115 million USD in revenue during the quarter.

Though revenue soared, AB InBev faced a slight challenge in total volumes. During the second quarter, total volumes declined by 1.4%, primarily due to a 1.8% drop in own beer volumes. However, non-beer volumes experienced a modest increase of 0.5%. The half-yearly results showed a similar pattern, with total volumes declining by 0.3% to 288 million hectoliters in the first half of the year, with own beer volumes down by 0.8%, and non-beer volumes up by 2.1%.

AB InBev's normalized EBITDA increased by 5.0% to 4,909 million USD in the second quarter of 2023. However, the EBITDA margin contracted by 69 basis points (bps) to 32.5%. In the first half of the year, normalized EBITDA grew by 9.1% to 9,668 million USD, but the margin contracted by 29 bps to 33.0%. It's worth noting that the figures for the first half of 2022 included an impact of 201 million USD from tax credits in Brazil.

The underlying profit, which excludes non-underlying items and the impact of hyperinflation, was 1,452 million USD in the second quarter of 2023. This was slightly lower than the corresponding quarter in 2022, which recorded 1,468 million USD in underlying profit. However, the half-yearly underlying profit for 2023 increased to 2,762 million USD, compared to 2,672 million USD in the previous year's first half.

The underlying EPS (earnings per share) for the second quarter of 2023 stood at 0.72 USD, a slight decrease from 0.73 USD in 2022. For the first half of 2023, the underlying EPS rose to 1.37 USD, compared to 1.33 USD in the same period last year.

AB InBev showcased improved financial stability, with the net debt to normalized EBITDA ratio standing at 3.70x as of June 30, 2023. This was an improvement from the previous year, which recorded a ratio of 3.86x on June 30, 2022, and a ratio of 3.51x on December 31, 2022.

Looking ahead to the rest of 2023, AB InBev remains optimistic about its prospects and anticipates growth in key areas.

(i) Overall Performance: The company projects its EBITDA to grow in line with its medium-term outlook, targeting a range of 4% to 8%. Furthermore, AB InBev aims for revenue to outpace EBITDA growth, driven by a healthy combination of volume and price. This forecast reflects the company's assessment of inflation and other macroeconomic conditions that may influence its operations.

(ii) Net Finance Costs: AB InBev foresees net pension interest expenses and accretion expenses to be within the range of 200 to 230 million USD per quarter. These figures may vary depending on currency fluctuations and interest rates. In terms of the company's average gross debt coupon for FY23, it is expected to hover around 4%.

(iii) Effective Tax Rates (ETR): For the fiscal year 2023, AB InBev projects its normalized effective tax rate (ETR) to fall within the range of 27% to 29%. It's important to note that this outlook does not consider the potential impact of future changes in legislation that might affect taxation policies.

(iv) Net Capital Expenditure: In line with its strategic priorities for the long term, AB InBev plans to invest significantly in capital expenditure. The projected net capital expenditure for FY23 is expected to fall between 4.5 and 5.0 billion USD. These investments are vital to supporting the company's growth initiatives and innovation in its product offerings.

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