Anheuser-Busch InBev posts strong financial results, warns of “challenging” year
Anheuser-Busch InBev today posted first-quarter sales and profits that handily beat analysts’ expectations and sent its stock flying on the steepest climb since last fall.
There’s lots of news packed into the company’s press release, which you can read here. The bottom line: The world’s biggest brewer is selling more beer in a variety of key markets, tamping down costs, selling off its Korean beer business, looking to mesh Anheuser-Busch more completely into the global corporation, slashing spending on big projects, and planning to make its stock available in the U.S.
At the same time, the company warned that earnings growth might slow down in the rest of the year because of difficult comparisons and “challenging” market conditions.
Got that?
Here are some key numbers:
- ABI’s total beer volumes (liquid sold) rose 0.9 percent. Not too shabby. So far this year, ABI has gained market share in seven key markets: Argentina, Belgium, Germany, the U.K., South Korea, Ukraine and the U.S.
- Revenues were up 4.7 percent. The company said it continued to focus on premium brands, “despite difficult economic conditions.”
- “Normalized” profit for shareholders nearly doubled, to $783 million.
- ABI wants to capture $1 billion of “synergies” from Anheuser-Busch this year. As an admitted hater of the word “synergies,” we will only say this: That level of cost cutting sounds drastic. For perspective, It’s roughly equal to half of Anheuser-Busch profits in 2007 ($2.12 billion).
- The company achieved $295 million in “synergies” in the first quarter alone.
- ABI also wants to reduce capital expenditures - spending on big projects, such as brewery upgrades - by at least $1 billion, “while not compromising the quality of our products and the safety of our people.”
- As part of a plan to sell off $7 billion in assets to pay down debt, the company said it would sell its South Korean beer business to private equity group Kohlberg Kravis Roberts for $1.8 billion.
- The U.S. was a stalwart market for ABI. The company’s shipments to wholesalers grew by half a percentage point here. One link down the distribution ladder, sales to retailers rose by a solid 2 percent, which may indicate nice demand for ABI’s beer on the retail level.
- ABI’s European brands did well in the U.S., outrunning the weakness of the overall imported beer category. Stella Artois volumes grew almost 37 percent.
The first quarter showed “strong results in a difficult environment,” chief executive Carlos Brito said in a statement. “I am especially encouraged by our progress in integrating Anheuser-Busch.”
“2009 is off to a good start, but we recognize that many challenges remain,” Brito said. “While our business continues to show resilience in a tough global macroeconomic environment, we recognize the challenging operating landscape for the rest of the year.”
(1 votes, average: 5 out of 5)
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Jeremiah McWilliams is a native Virginian who came to the Post-Dispatch in early 2007 to cover beer and other consumer products. He previously covered manufacturing for the Virginian-Pilot newspaper in Norfolk, Va. He is a graduate of Washington and Lee University. 
Good for AB InBev, good for St. Louis. This goes to show that beer consumers are smart and know a good thing when they taste it. All of the mad blogger nonsense aside, AB InBev will continue to do well for one simple reason; they have the best tasting, highest quality beer. There’s just nothing better than a frosty, cold Bud or Bud Light … aaaaahhhh! A salute to all of our St. Louis brothers and sisters who brew, package, distribute, sell and enjoy ABI beers. Long live the king!
TrueblueStLou, I appreciate your loyalty—I’m sure it has served you well at AB. But the management of the company has some serious issues as a result of capturing $1 billion in synergies this year. Inbev is doing well at the expense of your brothers and sisters you pass in the hallways, the terms and conditions enforced on suppliers, and the thousands of lives turned upside down as a result of layoffs. I still continue to support AB products to some extent, only because of the STL employees, but admittedly purchase far less than previous. AB produces very consistent products. But I have also found that there is a whole new world of beer exploding in America right now that is fascinating, extremely high quality, and simply amazing. I salute St. Louis workers as well, but in the back of my mind also realize that your profits go to a foreign company and taxes on those earnings go to a foreign government. The sale of AB was a tragedy for STL, just as the closing of the Chrysler plant in Fenton. And I don’t think I’m alone in saying that I have really made a much more concerted effort to purchase products manufactured and owned by Americans.
Well, we’ve already heard how AB-I has pushed an excess of product onto the distributors. They also haven’t had to pay most of their bills this ENTIRE quarter due to the move to 120 day payments to vendors. Of course they did well. They didn’t pay their bills and they forced their customers to buy more of their product. I’d have some extra cash in the bank, too, if I decided not to pay my bills for 4 months people to buy things from me that they don’t need. I think I’ll reserve judgement on this news until the next quarter rolls around.
correction….
…”if I decided not to pay my bills for 4 months and I got people to buy….”
Sparky, I’m a casualty of the InBev takeover. But I realize that business is business. If I had any complaints it would be with the previous rather than the current management team. My personal situation doesn’t change the fact that the success of the new company is very important to St. Louis and many of our neighbors. And to my test as well as many others, the beer is still the best. The specialty beers are good to sample once in a while (I love the Shock Top)but for the most part I need my drinkability. I agree about buying American where possible but that’s not really an option with all but a very small segment of the beer industry. In my book I’ll go with the beer I know is brewed by Americans right here in St. Louis. Freedom of choice is great. Enjoy your beer!
I’m with b, I’ll wait until next quarter. It’s easy to post a increase profit when you don’t have to pay any of your bills. Do you think it’s strange this news coincides with the stock offering? I wonder if they will disclose these profits include 120 days worth of not having a bill to pay?
Profits and volume are very easy to “adjust” in the first few quarters. Back load expenses, front load an inventory push and consider that .9 is in their minds “an increase”. Its a rounding error in most companies this size and for them is a few more days inventory on a wholesaler’s floor. It used to be called “flat”. The books here will be hard to figure until we can compare year versus year in 2010. Most of their cost savings are a one-time advantage. Not sure how they account for people cuts. Finally let’s see how they are accounting for all the things they are selling…a one-time adjustment or as “sales”. Glad they are doing well but their brief history of speaking in more than 3 different languages will require further review before we drink the O’Doul’s.
Deferring payment of expenses for up to 120 days does not defer accounting recognition of the cost. Accounting results are accrual based, NOT cash based. Costs are assigned to the period of time in which they are incurred, not when they are paid. ABI’s new payment policy should not be deferring expenses at all–the only way to move expenses from one quarter to the next is to change the when an expense was accrued.
With so many companies losing money, you’d think there would be some sort of solace found in our hometown brewery/U.S. operations leading the charge in the A-B InBev earnings announcement. That says a lot about the good people working it hard here and across the country. Seriously, imagine being the Post-Dispatch — shrinking ad revenues, furloughing reporters to cut costs, all while its parent company continues to lose money — $51.8 million. Wow! Here’s a chance for all the complainers to support their local paper and up an subscription to save it. Yeah, right, for them it’s not about saving any company at all really. It’s about unbridaled and wreckless fingerpointing and accusations. I say support St. Louis and its companies so we can keep good, hardworking people employed and our region thriving. It’s time to promote The Lou, and like any good family, work through the tough times while sticking together.
Yes, right! Challenging year after this quarter! Because those distributor warehouses are all maxed out about right now, and the 120-day cycle on the supplier side will have come full circle. WooHoo!