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AB InBev (BUD) Q4 Earnings Miss Estimates, Revenues Beat

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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported fourth-quarter 2020 results, wherein the top line beat the Zacks Consensus Estimate, while earnings missed the same. Meanwhile, earnings improved on a year-over-year basis, while sales declined.

Despite the pandemic-led challenges, the better-than-expected top-line results demonstrated the company’s fundamental strength as well as continued resilience in the global beer category. Additionally, revenues benefited from strong volume growth and revenues per hectoliter (hl). However, higher cost of goods sold partly offset growth in the top line, which offset margins and the bottom line.

Going forward, the company remains keen on making the most of investments in its portfolio over the years as well as rapidly growing its digital platform, including BEES and Zé Delivery.

Overall, shares of the Zacks Rank #3 (Hold) company have declined 4% in the past three months compared with the industry’s fall of 0.3%.



Q4 Highlights

The company reported normalized earnings per share of $1.08, reflecting significant growth from 48 cents reported in the year-ago quarter. However, the bottom line missed the Zacks Consensus Estimate of $1.26.

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 81 cents in fourth-quarter 2020, down 6.9% from 87 cents earned in the year-ago quarter.

Revenues of $12,767 million declined 4.3% from the year-ago quarter but surpassed the Zacks Consensus Estimate of $12,375 million. It registered an organic revenue growth of 4.5% primarily on recovery in volume and revenue per hl. Notably, revenues per hl were up 2.7%.

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 improved 1.6%, with a 1.8% increase in own-beer volume and 1.7% growth in non-beer volume. The High-End Company reported revenue growth of 4.1% in the second half of 2020, reflecting continued strength of the premiumization trend.

Consolidated revenues at its three global brands — Budweiser, Corona and Stella Artois — advanced 1.5% globally and 1.3% outside their respective home markets in the fourth quarter.

The cost of sales rose 0.2% to $5,282 million and was up 7.9% on an organic basis. However, organic cost of sales per hl increased 6.4% due to supply-chain adjustments adapted to meet the evolving demand and operational deleveraging resulting from the impacts of COVID-19 on volumes.

The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $5,066 million, which declined 5.2% year over year and 2.4% on an organic basis. Normalized EBITDA margin contracted 40 basis points (bps) to 39.7% and declined 261 bps organically.

2021 Outlook

Although AB InBev expects continued disruptions and uncertainty from COVID-19, it anticipates the top and bottom lines in 2021 to improve considerably from 2020. It expects the top line to benefit from robust volume and pricing, which is expected to translate to bottom-line growth.

However, it expects EBITDA margin for 2021 to remain pressured due to adverse channel and packaging mix along with currency and commodity headwinds.

Management anticipates effective tax rate in 2021 to be higher than 2020 and 2019, owing to the phasing out of temporary COVID-19 measures and changes in legislation and tax attributes in certain key markets. Net capital expenditure is projected to be $4.5-$5 billion in 2021, driven by higher investments in innovation and other consumer-centric initiatives to fuel ongoing momentum.

3 Better-Ranked Stocks

Diageo plc (DEO - Free Report) has an expected long-term earnings growth rate of 8.3%. It carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Coca-Cola FEMSA S.A.B. de C.V. (KOF - Free Report) has an expected long-term earnings growth rate of 9.6%. It currently carries a Zacks Rank #2.

The Estee Lauder Companies Inc. (EL - Free Report) currently has a Zacks Rank #2 at present. It has an expected long-term earnings growth rate of 13.7%.

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