Beer giant AB InBev beats profit estimates, with Bud Light boycott set to ease one year on

Shares
of
Belgium’s


AB
InBev
rose
5%
Wednesday
morning
after
the
company
posted
higher
revenue
and
profit
in
the
first
quarter,
as
analysts
said
it
had
escaped
the
drag
from
a
year-long
boycott
of
its
Bud
Light
brand
relatively
unscathed.

The
world’s
biggest
brewer,
whose
brands
include
Corona
and
Stella
Artois,
notched
a
2.6%
revenue
increase
year-on-year
to
$14.55
billion
in
the
first
quarter,
narrowly
ahead
of
analyst
estimates.
That
was
despite
a
0.6%
drop
in
volumes
that
the
brewer
sold.

Underlying
profit
attributable
to
shareholders
was
higher
at
$1.5
billion,
also
above
an
LSEG-compiled
consensus.

A
social
media-led
campaign
against
Bud
Light
in
response
to
a
sponsorship
partnership
with
transgender
influencer
Dylan
Mulvaney
started
in
April
2023,
making
this
the
last
quarter
likely
to
be
negatively
impacted
by
a
year-on-year
comparison.

Former
U.S.
President
Donald
Trump
in
February urged
his
followers on
social
media
to
give
the
company
a “second
chance.”

The
furore
toppled
the
brand’s
status
as
the
best-selling
U.S.
beer,
but
also
generated
criticism
of
the
company
for
failing
to
support
Mulvaney.
It
has

prompted
wider
discussion
in
the
advertising
industry
about
corporations
fearing
backlash
for
promoting
diversity
or
inclusivity.

AB
InBev’s
Europe
CEO
Jason
Warner

told
the
U.K.’s
Telegraph
newspaper
earlier
this
week
that
the
drinks
firm
will “stay
in
our
lane”
following
the
reaction
to
the
campaign,
which
had
sought
to
reach
a
wider
range
of
consumers.

The
company
nonetheless
managed
to
increase
revenue
by
7.8%
last
year,
driven
by
higher
sales
in
the
Asia-Pacific
and
Central
America
regions.

The
first-quarter
results
showed
a
11.1%
drop
in
sales
of
AB
InBev’s
own
beer
brands
in
North
America,
which
it
said
was
primarily
due
to
Bud
Light.
Revenue
meanwhile
declined
2.7%
in
China
as
sales
dropped
6.2%.
The
drop
was
in-line
with
a
wider
industry
retreat
related
to
China’s
reopening
last
year
and
poor
weather
in
March,
the
company
said.

However,
sales
were
at
record
highs
in
Brazil
and
Colombia,
and
grew
firmly
in
Europe,
Mexico
and
South
Africa.
The
results
also
flagged
growth
in
its
Corona
brand,
particularly
for
its
non-alcoholic
beer
brand
Corona
Cero.

AB
InBev
reiterated
a
medium-term
outlook
for
earnings
before
interest,
taxes,
depreciation,
and
amortization
(EBITDA)
of
4%
to
8%.

“The
strength
of
the
beer
category,
our
diversified
global
footprint
and
the
continued
momentum
of
our
megabrands
delivered
another
quarter
of
broad-based
top-
and
bottom-line
growth,”
CEO
Michel
Doukeris
said
in
a
statement.

The
results
were
a “solid
print
at
the
start
of
the
year,”
analysts
at
Barclays
said
in
a
note.

“Bud
Light
continues
to
weigh
on
results,
but
this
is
the
last
quarter
to
face
a
significant
impact
–
it’s
all
easy
[comparisons]
from
here,”
they
said,
adding
that
the
company
had
got
its
hardest
quarter
out
of
the
way “with
little
to
no
bruises.”

“We
remain
optimistic
for
improvements
throughout
the
year
at
both
revenues
and
costs
leading
to
a
substantially
improved
balance
sheet
at
year
end,
and
a
likely
increased
buy​-​back.”

RBC
Europe
analysts
meanwhile
upgraded
their
price
target
on
the
stock
to
75
euros
($80.59)
from
73
euros. They
said the
earnings were “gratifyingly
dull”
with
the
potential
to
restore
AB
InBev’s
status
as
a “consistent
compounder.”

“We
are
past
the
anniversary
of
the
Bud
Light
debacle,
and
while
we
don’t
expect
a
substantial
bounce
back,
we
think
the
lack
of
a
drag
–
equivalent
to
some
10%
of
US
volumes
–
to
provide
a
further
fillip
to
investors’
perceptions,”
analyst
James
Edwardes
Jones
said
in
a
note.