AB InBev to Take $1.1 Billion Hit From Russia Venture Exit

(Bloomberg) -- Anheuser-Busch InBev will sell its stake in a Russian joint venture, taking a $1.1 billion hit as the world’s largest brewer joins the global move to exit operations following the country’s invasion of neighboring Ukraine.

Leuven, Belgium-based AB InBev said it will dispose of its holding in the AB InBev Efes venture, adding that it’s already in “active discussions” with partner Turkish brewer Anadolu Efes about buying the stake, in a statement Friday. Shares in AB InBev dropped 1.4% in early trading. Anadolu Efes gained as much as 5.1% in Istanbul, the highest since December. 

The move comes in the wake of decisions across the beer industry to halt operations in Russia. Danish brewer Carlsberg A/S on Thursday cut its earnings guidance and said it’s facing a $1.4 billion writedown as it moves ahead with plans to exit Russia, while Amsterdam-based Heineken NV said in late March it plans to sell its business in the country.

AB InBev said a request to suspend the license for production and sale of the Bud brand in Russia will also be part of a potential deal for the Russia JV. 

The company had previously announced that it would forfeit all financial benefit as a non-controlling partner from the venture, and will report the resulting $1.1 billion non-cash impairment as part of its first-quarter results.

What Bloomberg Intelligence Says:

AB InBev’s $1.1 billion asset writedown for the disposal of its Russian beer joint venture to Turkish partner Anadolu Efes represents just 0.5% of the company’s total assets, so is small fry, enabling management to better concentrate on its premium-beer strategy in key north and south American markets where it dominates. Russia has previously been a potential growth market for premium brews.

-- Duncan Fox, BI consumer-goods analyst

AB InBev Russia Asset Sale Small Beer Despite Big Number: React

Anadolu Efes was founded in 1969 and today is Europe’s fifth-largest brewer by production volume. The joint venture with AB InBev has 11 breweries and 3 malting complexes in Russia and 3 breweries in Ukraine, according to the company’s website. 

The Turkish company confirmed it is working on agreeing binding terms to buy out its Belgian partner, adding its “main focus continues to be ensuring the health and well-being of our people, while we wish for peace”, in a statement.

Russia’s invasion has triggered Europe’s worst security crisis in decades and handed businesses just recovering from the pandemic a fresh set of challenges. AB InBev’s planned exit from Russia comes only a few weeks after the brewer forecast that earnings growth will decelerate from a bumper pace in 2021 as higher raw material costs erode profitability. Brewers are facing the worst inflation in a decade and are having to increasingly pass on costs to consumers.

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