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AB InBev (BUD) Q2 Earnings & Revenues Lag Estimates, Rise Y/Y

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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported lower-than-anticipated earnings and sales in second-quarter 2021. However, its top and bottom lines improved significantly on a year-over-year basis. The company’s results reflected continued business momentum, owing to the reopening of the economy. It benefited from the unique commercial strategy, strong brand portfolio, investments in the digital platform and operation excellence, which led to market share growth across the majority of the key markets.

The results also demonstrated the company’s fundamental strength as well as continued resilience in the global beer category. Notably, its beer business reported 20.5% volume growth in second-quarter 2021. 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 3.2% in the past three months compared with the industry’s fall of 1%.


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Q2 Highlights

The company reported normalized earnings per share of 95 cents, up 106.5% from 46 cents in the year-ago quarter. However, the bottom line missed the Zacks Consensus Estimate of $1.21.

Underlying earnings per share (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs and the impacts of hyperinflation) were 75 cents in second-quarter 2021, up 87.5% from 40 cents earned in the year-ago quarter.

Revenues of $13,539 million improved 31.5% from the year-ago quarter but lagged the Zacks Consensus Estimate of $13,578 million. It registered an organic revenue growth of 27.6%, primarily driven by robust volume and revenue per hectoliter (hl) growth. The company notes that revenues in the second quarter were ahead of the pre-pandemic levels, improving 3.2% on a two-year basis from the second quarter of 2019.

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

Revenues per hl were up 5.8% on an organic basis. Total organic volume grew 20.8%, with a 20.5% increase in the own-beer volume and 23.2% growth in the non-beer volume.

The company’s premium portfolio reported revenue growth of 28% in the second quarter. This included strong performance of its three global brands — Budweiser, Corona and Stella Artois — which advanced 23% globally and 19.3% outside their respective home markets in the second quarter. The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Revenues for the Beyond Beer business increased 45% in the second quarter. The Beyond Beer portfolio also delivered an average gross profit per hl 20% higher than its traditional beer business.

The cost of sales increased 26.4% to $5,720 million and was up 23.2% on an organic basis.

The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,846 million, which rose 41.9% year over year and 31% on an organic basis. Normalized EBITDA margin expanded 260 basis points (bps) to 35.8% and grew 88 bps organically. This growth is mainly attributed to a positive brand mix, revenue-management initiatives, operational leverage and cost discipline in the second quarter. This was partly offset by negative currency translations and commodity headwinds.

SG&A expenses increased 27.6% year over year to $4,511 million and 23.2% on an organic basis. Higher SG&A expenses can be attributed to increased variable compensation accruals and marketing investments to support top-line growth.

2021 Outlook

For 2021, AB InBev expects normalized EBITDA growth of 8-12%, with revenue growth anticipated to be higher than EBITDA growth, driven by strong volume and pricing.

Management anticipates an effective tax rate of 28-30% for 2021, an increase from that reported in 2020. The year-over-year increase relates to the phasing out of the temporary COVID-19 measures and changes in tax attributes in some key markets. Net capital expenditure is projected to be $4.5-$5 billion for 2021, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.

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