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AB InBev Reports Strong Q4 Earnings

Zacks Equity Research

The world’s largest brewer, Anheuser-Busch InBev SA/NV(BUD), also known as AB InBev, posted better-than-expected fourth-quarter 2013 results yesterday, wherein its normalized earnings of $1.46 per share surpassed the Zacks Consensus Estimate of $1.29. Moreover, the reported figure registered year-over-year growth of 32.7% from the comparable year-ago quarter earnings of $1.10 per share.

The company’s bottom-line results mainly benefited from strong revenue growth, lower cost of sales and leveraged operating expenses.

Revenues for the quarter registered organic growth of 4.6% and reached $11,711 million, thereby surpassing the Zacks Consensus Estimate of $11,528 million. The year-over-year organic growth was mainly driven by an 8.4% rise in revenues per hectoliter (hl), partially offset by 1.7% decline in total volume.

In the said quarter, cost of sales dropped 0.3% organically to $4,482 million. However, on a constant geographic basis, cost of sales increased 1.9% per hl.

Total operating expenses during the quarter registered a 1% decline on an organic basis. The company’s normalized earnings before interest, taxes, depreciation and amortization (:EBITDA) grew 13.1% year over year to $5,199 million while as a percentage of sales, it improved 336 basis points to 44.39%.

Full-Year 2013 Performance – A Synopsis

The company’s revenue for the year came in at $43,195 million, up 3.3% year over year on an organic basis. The rise was primarily attributable to a 5.8% rise in revenues per hl. However, in 2013, revenues fell short of the Zacks Consensus Estimate of $43,837 million. Earnings for the year came in at $4.91 per share, registering year-over-year growth of 9.1% and beating the Zacks Consensus Estimate of $4.83.


AB InBev, which competes with Brown-Forman Corporation (BF.B) and Beam Inc. (BEAM), ended 2013 with cash and cash equivalents of R$3,924 million. The company’s net debt increased by $8.7 billion to $38.8 billion at the end of 2013 compared with the 2012 level. The rise was mainly due to the acquisition of Grupo Modelo.

During the full year, the company generated $13,864 million of cash from its operating activities, up 4.5% from the 2012 level.

In 2013, AB InBev paid total dividend of $6,253 million to shareholders. Further, the company has revealed that its board will propose a final dividend of €1.45 per share at the Annual General Meeting to be held on Apr 30, 2014. If approved, the total dividend for 2013 will be €2.05 per share, marking an increase of 21% from 2012. The dividend will be payable from May 8 to shareholders of record on May 7.


Despite a challenging macroeconomic environment, AB InBev expects improvement in volume in the U.S., Mexico, Brazil and China. The company’s net revenue per hectoliter will likely grow at par with inflation while cost of goods sold per hectoliter is expected to increase in low single digits. Furthermore, AB InBev intends to make capital expenditure of R$4.0 billion related to innovation and the capitalization of emerging opportunities in the market.

AB InBev currently has a Zacks Rank #4 (Sell). A better-ranked company in the industry is Constellation Brands Inc. (STZ), which sports a Zacks Rank #1 (Strong Buy).

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