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AB InBev (BUD) Beats on Q2 Earnings & Sales as Markets Evolve

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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported second-quarter 2020 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. However, owing to the significant impacts of the coronavirus outbreak in the second quarter, both earnings and sales declined on a year-over-year basis.

Despite a decline in volumes, the company witnessed gradual improvement on a month-to-month basis, as the situation evolved and the on-premise channels across many countries started opening. Further, strength in the off-premise channel and premium brands remain encouraging. Not only this, the company’s investment behind B2B platforms, e-commerce channels and digital marketing have accelerated in the past few months, which is likely to aid growth.

Overall, shares of the Zacks Rank #3 (Hold) company have gained 26.6% in the past three months compared with the industry’s growth of 17.1%.


Q2 Highlights

The company reported normalized earnings per share of 46 cents, reflecting a decline of 60.7% from $1.17 reported in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of 31 cents.

Underlying earnings per share (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs, and the impact of hyperinflation) were 40 cents in second-quarter 2020, down 63% from $1.08 earned in the year-ago quarter.

Revenues of $10,294 million declined 24.3% from the year-ago quarter. The company registered an organic revenue decline of 17.7% primarily due to a decrease in volume sold due to restrictions related to the coronavirus pandemic. The top line surpassed the Zacks Consensus Estimate of $9,292 million. Meanwhile, revenues per hectoliter (hl) fell 0.6%.

AnheuserBusch InBev SANV Price, Consensus and EPS Surprise


AnheuserBusch InBev SANV Price, Consensus and EPS Surprise

AnheuserBusch InBev SANV price-consensus-eps-surprise-chart | AnheuserBusch InBev SANV Quote

Total organic volume declined 17.1%, with a 17.2% decrease in own-beer volume and a 15.5% fall in non-beer volume. The company’s second-quarter volumes were primarily impacted by the coronavirus outbreak. However, it noted gradual improvement in volume as the quarter progressed. Notably, organic volumes declined 32.4% in April and 21.4% in May, while it improved 0.7% in June. The company attributed this growth to the resilience in the beer category.

Consolidated revenues at its three global brands — Budweiser, Corona and Stella Artois — declined 16.6% globally and 12.6% outside their respective home markets in the second quarter.

The cost of sales declined 12.6% to $4,524 million and was down 4.9% on an organic basis. However, organic cost of sales per hl increased 15.2% due to operational deleverage on volumes due to the COVID-19 outbreak mostly on the closure of beer operations in many regions.

The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $3,414 million, which declined 39.5% year over year and 34.1% on an organic basis. Normalized EBITDA margin contracted 830 basis points (bps) to 33.2% and declined 825 bps organically.

3 Better-Ranked Beverage Stocks

The Boston Beer Company, Inc. (SAM - Free Report) delivered an earnings surprise of 113.2%, on average, in the trailing four quarters. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Coca-Cola European Partners PLC (CCEP - Free Report) currently has a long-term earnings growth rate of 4.1% and flaunts a Zacks Rank #2 (Buy).

Monster Beverage Corporation (MNST - Free Report) currently has a Zacks Rank #2 and a long-term earnings growth rate of 8.6%.

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