AB InBev takes a knock from falling sales in Brazil

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Anheuser-Busch InBev, the world’s biggest brewer that is in the process of acquiring SABMiller, missed earnings estimates for the first quarter, hit by currency fluctuations and lower sales volumes in Brazil, its biggest market.

Revenue fell 10% from a year earlier, to $9.4bn from $10.453bn. Normalised profit attributable to equity holders fell to $844m from $2.294bn, and AB InBev said organic earnings growth was "more than offset" by high finance charges and currency effects.

It said normalised earnings per share before currency translation, mark-to-market and pre-funding of the SABMiller deal were stable, at $0.93 from $0.94 a year earlier.

The brewer incurred a net finance cost of $1.219bn in the quarter, from a net finance income of $91m a year earlier. The main reasons were a $273m increase in interest costs related to prefinancing for the SABMiller purchase, and "an unfavourable mark-to-market adjustment of $138m linked to the hedging of share-based payment programmes".

The poor performance in Brazil — where sales volumes fell 10% from a year earlier as the effects of tough economic conditions were felt — was expected, and the company kept its guidance for full-year revenue growth in the country in the mid to high single digits. It also said it still expected overall organic revenue per hectolitre to grow faster than inflation for the full year.

Total global volumes for the quarter were 107,363 hectolitres, down from 104,868 hectolitres a year earlier, a fall of about 2%.

AB InBev said the SABMiller acquisition was on track to close in the second half of the year. It has recently announced asset sales to head off regulatory challenges to the deal.

Last week it offered to sell all of SABMiller’s central and eastern European assets. That was in addition to the sale of the Peroni, Grolsch and Meantime brands to Japan’s Asahi.

In China, SABMiller is selling its 49% stake in CR Snow to joint-venture partner China Resources Beer.

On Wednesday, SABMiller, The Coca-Cola Company and Gutsche Family Investments committed themselves to invest R800m in developing entrepreneurs in SA, to gain competition authority approval for the acquisition.

AB InBev shares were trading 2.11% lower at R1,783.03 shortly after the opening on the JSE on Wednesday.