Budweiser Brewer Beats Profit Estimates, Forgos Dividend Payment
Anheuser-Busch InBev NV posted profit that beat analysts’ estimates on robust demand in the U.S. and Brazil, while forgoing a dividend payment on concern over the worsening coronavirus pandemic.
Adjusted earnings before interest, taxes, depreciation and amortization fell 0.8% in the third quarter from a year earlier, the world’s largest brewer said in a statement Thursday. Analysts expected an 8.9% decline.
The performance echoes the results of rivals Heineken NV and Carlsberg A/S, which also beat estimates on a revival in demand following pandemic-related lockdowns earlier this year. AB InBev’s beer sales grew more than a quarter by volume in Brazil in the three-month period. Yet the resurgent pandemic is clouding the outlook.
“While we expect our performance in the second half of this year to be better than the first, the environment remains volatile and uncertain, especially as some governments are renewing restrictions in several markets,” AB InBev Chief Executive Officer Carlos Brito said in the statement.
The Budweiser brewer’s shares rose 3.5% to 46.85 euros by 9:02 a.m. in Brussels. Through Wednesday, they had fallen 38% this year, more than twice as much as Heineken and Carlsberg.
Germany and France are imposing tougher measures to combat the coronavirus, shuttering bars, restaurants and non-essential services, while allowing schools and most businesses to operate.
In that context, AB InBev said it would omit its interim dividend to focus on reducing debt, which peaked at more than $100 billion following the takeover of rival SABMiller in 2016. Since then, the brewer has refinanced to take advantage of lower interest rates and last year led an initial public offering of its Asian subsidiary, which earlier Thursday reported strong demand from China and its e-commerce channel.
Reducing net debt to two times earnings, from about double that currently, is one of the most pressing priorities of Chief Financial Officer Fernando Tennenbaum, who replaced Felipe Dutra earlier this year.
If the brewer eliminated its 2020 dividend, which it said would be reviewed early in the new year, it would save about $4 billion. In April, the company said it would halve its 2019 dividend to 50 cents per share due to the pandemic.
©2020 Bloomberg L.P.