AB InBev Budweiser and Bud Light beer cans in a store within the New York City borough of Queens on February 28, 2024.
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Stocks from Belgium AB InBev rose 4% on Wednesday after the corporate posted higher first-quarter sales and profit as analysts said it escaped relatively unscathed from the strain of a years-long boycott of its Bud Light brand.
The world’s largest brewer, whose brands include Corona and Stella Artois, posted a 2.6% year-over-year rise in first-quarter revenue to $14.55 billion, narrowly beating analyst estimates. This is despite a 0.6% decline in volumes sold by the brewery.
Underlying profit attributable to shareholders was higher at $1.5 billion, also above a consensus prepared by LSEG.
A social media-led campaign against Bud Light in response to a sponsorship partnership with transgender influencer Dylan Mulvaney began in April 2023, making this the last quarter expected to be negatively impacted year-over-year.
Former US President Donald Trump urged his followers on social media in February to offer the corporate a “second chance”.
The uproar toppled the brand’s status because the top-selling U.S. beer, but additionally sparked criticism of the corporate for not supporting Mulvaney. This has sparked a broader discussion within the promoting industry about corporations fearing a backlash for promoting diversity or inclusivity.
Jason Warner, European CEO of AB InBev told Britain’s Telegraph newspaper said earlier this week that the drinks company would “stay in our lane” following the response to the campaign, which was geared toward reaching a wider range of consumers.
Still, the corporate managed to extend revenue by 7.8% last 12 months, driven by higher sales within the Asia Pacific and Central America regions.
First-quarter results showed an 11.1% decline in sales of AB InBev’s proprietary beer brands in North America, which it said was largely resulting from Bud Light. Meanwhile, sales in China fell 2.7%, while revenue fell 6.2%. The decline is consistent with a broader industry decline related to China’s reopening last 12 months and poor weather in March, the corporate said.
However, sales reached record highs in Brazil and Colombia and rose significantly in Europe, Mexico and South Africa. The results also showed growth within the Corona brand, particularly the non-alcoholic beer brand Corona Cero.
“Little to no bruising”
AB InBev reiterated a medium-term forecast for earnings before interest, taxes, depreciation and amortization (EBITDA) of 4% to eight%.
“The strength of the beer category, our diversified global footprint and the continued momentum of our mega brands led to another quarter of broad-based sales and profit growth,” CEO Michel Doukeris said in a press release.
The results were “solid numbers at the start of the year,” Barclays analysts said in a note.
“Bud Light continues to weigh on results, but this is the last quarter to see a significant impact – that’s all simple.” [comparisons] from here,” they said, adding that the corporate got through its most difficult quarter “with few to no bruises.”
“We remain optimistic that there will be improvements in both revenues and costs throughout the year, leading to a significantly improved year-end balance sheet and likely higher repurchase volumes.”
Analysts at RBC Europe have meanwhile raised their price goal for the shares from 73 euros to 75 euros (80.59 US dollars). They said earnings were “pleasantly weak” and had the potential to revive AB InBev’s status as a “persistent compounder.”
“We’re past the anniversary of the Bud Light debacle, and while we do not expect a big rebound, we expect the shortage of resistance – corresponding to about 10% of US volume – to proceed to fuel investor perceptions “,” analyst James Edwardes Jones said in a note.
