Belgium: AB InBev on the way to recovery

AB InBev published today its second quarter results which are impacted by a massive volume decline of 17.1 percent. However, in the course of the three months results were continuously improving and the last month, June, even showed already a positive result on a year on year basis.

“Our performance in the second quarter was materially impacted by the COVID-19 pandemic, as expected. As the quarter progressed, however, we saw considerable improvement. April volumes declined by 32.4%, May volumes declined by 21.4% and June volumes grew by 0.7%, demonstrating the resilience of the global beer category,” AB InBev reported today.

Commenting on several strategic markets, Carlos Brito, CEO of AB InBev said in an earnings call:                                                                                

• “In Mexico, our beer operations faced a shutdown in April and May. The restrictions were lifted at the beginning of June, and we recovered rapidly, delivering beer volume growth of high teens in the month and outperforming the industry in the quarter.

• “In the US, we delivered top- and botton-line growth through the success of our premium, known and trusted mainstream brands and the strength of the off-premise channel.

• “In Brazil, our beer business delivered a healthy performance in the context of a volatile environment, with only a slight volume decline that outperformed industry according to our estimates.

• “In Europe, our performance was heavily impacted by on-premise restrictions. However, we saw a gradual reopening of the channel throughout the quarter, resulting in an improving volume trend. We continue to gain market share across almost all of our markets, supported by the strength of our premium brands.

• “China delivered exceptional results, with its highest ever monthly volume.”

If China, where the pandemic began and where lockdown took place earlier than elsewhere, could be used as a blueprint for other markets, AB InBev could return soon to a worldwide growth path. Still, the company is cautious and warned that “improvements may be impacted by the re-implementation of restrictions in certain markets, such as the restrictions imposed in South Africa [, 13.7.2020] in July.”

Therefore, in view of the economic uncertainties caused by the COVID-19 pandemic, the world’s leading brewer identified a potential risk of impairment for the South Africa and Rest of Africa cash generating units and concluded that it was prudent to recognize a USD 2.5 billion non-cash goodwill impairment charge. This charge is partially offset by a USD 1.9 billion gain on the disposal of the Australian operations (, 1.4.2020).

“Our debt portfolio has a very manageable maturity profile on coupon. And our liquidity position […] remains very comfortable despite the impact of COVID-19 on our business. Therefore, while we are prioritizing deleveraging, we are not forced to make any short-term decisions that won't be value-creative in the long run,” said Fernando Tennenbaum, CFO of AB InBev.

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