AB InBev profit falls on US, Europe weakness

30 Jul 2015 | Author: | No comments yet »

AB InBev Second-Quarter Earnings Miss Estimates on U.S. Weakness.

Anheuser-Busch InBev NV, the world’s biggest brewer, reported second-quarter profit growth that missed estimates on lower U.S. shipments and a difficult comparison with last year’s sales boost from soccer’s World Cup.

EARNINGS FORECAST: Net income of $1.29 a share is the consensus of analysts surveyed by Thomson Reuters, compared with $1.60 a share reported a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization rose 4.6 percent on an organic basis to $4.16 billion, the Leuven, Belgium-based maker of Stella Artois said today in a statement. –TOUGH COMPETITION: A surge in beer-drinking during last year’s World Cup boosted profits at AB InBev during the second quarter, creating tough competition for the company this year. On the other side was a growing group of upstart brewers with limited production, but big dreams in their heads and big hops in their brews. “Anheuser-Busch is making a lot of calls, they’re taking a lot of calls, visiting a lot of breweries.

Anheuser-Busch InBev SA/NV (BUD)’S monthly performance stands at – 1.70% with an analyst rating of 2.40 Hasbro Inc. (HAS) of the Consumer Goods sector (Toys & Games) has changed by 0.73% ( 0.48% since open) at mid-day today. Faced with declining popularity of its flagship Bud brand, AB InBev is looking elsewhere for growth with different beer styles, new packaging like recloseable aluminum bottles and by acquiring fast-growing American craft brews like Elysian and 10 Barrel. The company is also grappling with weakening consumer sentiment in Brazil, its second-biggest market. “The second quarter was challenging, with tough comparables from the FIFA World Cup, and weak economic conditions in a number of our markets,” the company said.

In the years since, Anheuser-Busch flagship brands like Budweiser and Bud Light have struggled and Anheuser-Busch North American sales volume has been on a downward trend—including a drop of 1.3 percent last year. Eight months later, it purchased Bend, Oregon’s 10 Barrel Brewing, again not disclosing the terms, but with some industry insiders pegging the cost at about $50 million. The purchase of Elysian gave a slight pause to many who thought there may be a regional craft acquisition strategy at work, with the presumption being Anheuser-Busch was looking for a craft brewing presence in each region. “They’ve both been very weak markets for Anheuser-Busch, they have a very low market share there,” he said. “If you look at the IRI data, the hottest craft brewer last year was 10 Barrel in Portland, and in Seattle, it was Elysian.

So they can get a couple share points and hot brands in markets where they are struggling.” The spending spree has certainly gotten the attention of the beer business, with craft breweries looking at Anheuser-Busch’s involvement with trepidation—a fear Goeler says is misguided. “The number one principle is to make sure that we let them maintain their culture, their authenticity, so we’re not buying them to make them into Anheuser-Busch companies,” he said. “We’re buying them for who they are and what they’ve achieved and what they’ve done in the world of beer.” “We are getting craft beers to more consumers than probably anybody in the U.S.,” said Goeler. “We are able to bring resources to these companies and help them reach and get more people interested in the industry.” “California is a must. It’s the largest market in the country,” said Steinman. “At its peak, Anheuser Busch had a 50 share of market in California and last year it was down to 36.5.

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