Top brewer reports lower profit as beer sales decline

Anheuser-Busch InBev, the world’s biggest brewer, hasreported an unexpected decline in second-quarter volume and lower profit as sales fell in the US and Europe.

The volume of beer sold slid 0.1%, excluding acquisitions and disposals. Analysts had anticipated growth, with the median of eight estimates for a 1.3% gain.

Revenue was hurt by reduced shipments to US wholesalers, sales to whom fell 2.1%, said the Leuven, Belgium-based company.

Western European volume dropped 7.1% as consumers in the UK reined in spending on brands including Stella Artois, according to AB InBev, which is relying on emerging markets for growth.

“The second-quarter does not look good,” Pablo Zuanic, an analyst at Liberum Capital said.

The weakness of sales in North America is “partly explained by shipments being flattered in the first quarter from new product launches and the effect being unwound in this quarter”.

The decline in shipments to US wholesalers reflected changes in the pace and timing of deliveries to avoid peaks of demand in trucking capacity. Profit in the second quarter was also hurt by higher administrative and distribution costs in the US as the company tried to meet demand for new brands including Bud Light Platinum and Bud Light Lime-A-Rita.

The brands were initially produced in one or two breweries, “and as a result we had to ship a lot of products across the US”, chief financial officer Felipe Dutra told reporters. “We were somehow victims of our own success.”

Earnings before interest, tax, amortisation and depreciation slid 4% to $3.59bn (€2.91bn), the maker of Budweiser beer said.

The median estimate of eight analysts surveyed by Bloomberg News was $3.66bn.

“The silver lining from the second quarter, if there is one, is that part of the lower margins in North America is explained by the success of Bud Light Platinum and Bud Light Lime-A-Rita,” Mr Zuanic said.

High unemployment as well as shifting consumer tastes away from mainstream brands toward craft beers, spirits and wine are hurting sales in the US. In Europe, business has been crimped by the debt crisis and weak consumer confidence.

Second-quarter sales in western Europe were hindered by rain which was “more relevant than the economic impact”, said Mr Dutra.

— Bloomberg

More in this section

Budget 2022 Logo

What impact will this  year's budget have on you and your business.

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up