Asia: AB InBev and Diageo report weaker sales because of COVID-19

AB InBev and other major consumer goods manufacturers suffer from the COVID-19 outbreak. The world’s leading brewer reported today that the virus and its consequences has resulted in lost revenues of around USD 285 million over the first two months of 2020. Especially China, where the first cases of the respiratory disease occurred, was most hit.

“The impact of the COVID-19 virus outbreak on our business continues to evolve,” AB InBev said in its report on the fourth quarter and full year 2019 results. “The outbreak has led to a significant decline in demand in China in both on-premise and in-home channels. Additionally, demand during the Chinese New Year was lower than in previous years as it coincided with the beginning of this outbreak. For the first two months of 2020, we estimate that the outbreak has resulted in lost revenue of approximately 285 million USD and lost EBITDA of approximately 170 million USD in China.”

Similarly Diageo, the world’s biggest spirits maker and producer of Guinness beer, has warned of a profit hit of up to GBP 200 million (USD 256m) from the COVID-19 outbreak.

“Bars and restaurants [in Greater China] have largely been closed and there has been a substantial reduction in banqueting,” Diageo said in a press statement on Wednesday.  “As the majority of consumption is in the on-trade, we have seen significant disruption since the end of January which we expect to last at least into March. Thereafter, we expect a gradual improvement with consumption returning to normal levels towards the end of fiscal 2020.”

Equally on-trade business in other impacted countries in the Asia Pacific region was affected. “The outbreak in several other Asian countries, especially South Korea, Japan and Thailand, has led to events being postponed, a reduction in conferences and banquets, and a drop in tourism which have all impacted on-trade consumption. We expect gradual improvement throughout the fourth quarter of fiscal 2020.”

Last but not least, “the outbreak has caused a significant reduction in international passenger traffic, especially in Asia. Recovery of passenger traffic is assumed to be gradual, resulting in weaker performance for the remainder of fiscal 2020,” Diageo concludes the effects of the virus.

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