By Michael Susin
Budweiser brewer Anheuser-Busch InBev posted sales volumes that fell more than expected in the third quarter, dragged by weak consumer spending in China.
The world's largest brewer--which also houses Stella Artois and Michelob Ultra in its portfolio--said Thursday that overall volumes fell 2.4% on an organic basis, a steeper drop than the 0.4% decline that analysts expected.
The company reported a double-digit decline in sales in China, hurt by a soft industry and particularly from continued spending weakness in bars, pubs and restaurants, AB InBev said. In Argentina, sales fell as overall consumer demand was hit by inflationary pressures.
AB InBev's peers have also highlighted weakening demand, driven primarily by uncertainty about the U.S. economy and worsening market conditions in China. Copenhagen-based Carlsberg on Thursday cited a poor performance in China as its third-quarter sales missed expectations, while Dutch brewer Heineken's sales for the period also missed market views as the group grappled with challenging consumer and industry trends, particularly in the Americas and Asia Pacific.
Elsewhere, a downturn in alcohol consumption is hurting the spirits sector. Companies like Diageo, Pernod Ricard and Davide Campari-Milano have flagged a challenging consumer environment.
AB InBev's total revenue fell to $15.05 billion from $15.57 billion, driven in part by pricing actions and premiumization--the strategy of shifting toward the higher end of the market. Analysts' consensus for revenue was $15.55 billion, according to an LSEG Refinitiv poll.
Net profit, however, jumped to $2.07 billion from $1.47 billion for the same period a year earlier, beating market consensus of $1.92 billion provided by LSEG Refinitiv.
A bright spot for the company has been strong growth in its no-alcohol beer portfolio, with Corona Cero delivering triple-digit volume growth and Budweiser Zero volume up by more than 20%.
Consumers in many parts of the world, especially where inflation and pricing remain relatively high, are spending less on alcoholic beverages. The trend also reflects changes in tastes, given the increasing preference for non-alcoholic and low-alcohol options.
AB InBev said no-alcohol beer is one of the industry's fastest-growing beer categories. The company has a portfolio of 30 brands and recently invested 31 million euros ($33.7 million) to expand its no- and low-alcohol brewing capabilities.
The brewer reported a 7.1% increase in normalized earnings before interest, tax, depreciation and amortization--one of its preferred metrics, which strips out exceptional and other one-off items--to $5.42 billion, below the consensus of $5.59 billion taken from LSEG Refinitiv.
Meanwhile, the company launched a $2 billion share buyback program, to be completed within the next 12 months.
Looking ahead, AB InBev InBev narrowed its 2024 earnings before interest, taxes, depreciation and amortization target to grow between 6% and 8%. It previously anticipated growth for the year to be in line with its medium-term outlook of between 4% and 8%.
Write to Michael Susin at michael.susin@wsj.com
(END) Dow Jones Newswires
October 31, 2024 03:50 ET (07:50 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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