The world's largest brewer, Anheuser-Busch InBev SA/NV (BUD – Snapshot Report), also known as AB InBev, reported lower-than-expected top and bottom lines for second-quarter 2015 mainly as a result of tough year over year comparisons due to sales gains from the FIFA World Cup in 2014 and a challenging environment in many markets where the company operates.
AB InBev's second-quarter normalized earnings of $1.21 per share fell 24.4% from $1.60 in the year-ago quarter. Quarterly earnings were also significantly below the Zacks Consensus Estimate of $1.34.
Revenues for the quarter declined 9.4% year over year to $11,052 million and missed the Zacks Consensus Estimate of $11,640 million. The company registered organic growth of 4.1% on the back of a 6.1% rise in revenues per hecto-liter (hl) and strong volume growth in Mexico and Latin America South. The improvement in revenue per hecto-liter resulted from the company's ongoing revenue management initiatives and enhanced brand mix due to its premium strategies, offset by a decline in volumes.
Total volumes fell 2.2%, including 2.1% decline in beer volumes and 2.9% decline in non-beer volume. The decline in beer volumes is attributed to difficult comparisons with last year's FIFA World Cup, particularly in Brazil and Europe, and tough trading environment in many countries, offset by volumes gains in Mexico and Latin America South.
However, the company's three global brands namely – Budweiser, Corona and Stella Artois reported volume gains of 6%, 7.8% and 4.9%, respectively. This resulted in volume increase of 6.4% from these global brands.
Cost of sales fell 8.3% year over year to $4,462 million, while organically it grew 4.8%. Organic cost of sales per hl rose 7.2%. Increase in organic cost of sales was due to negative foreign currency translations, coupled with higher depreciation from recent investments in Brazil. On a constant geographic basis, cost of sales per hl increased 7.4%.
The company's normalized earnings before interest, taxes, depreciation and amortization (EBITDA) fell 14.3% year over year to $4,156 million but grew 4.6% on an organic basis. EBITDA margin expanded 17 basis points organically to 37.6%.
Other Financials
AB InBev ended second quarter with cash, cash equivalents and short-term investments in debt securities less bank overdrafts of $6,722 million. The company's net debt at the end of second quarter totaled $44.4 billion, up from $42.1 billion at the end of 2014.
As of Jun 30, 2015, the company had total liquidity of $14,722 million, including $8,000 million available under committed long-term credit facilities and the aforementioned cash, cash equivalents and short-term investments in debt securities less bank overdrafts.
During the quarter, AB InBev successfully completed its $1 billion share repurchase program entered on Feb 26, 2015.
