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AB InBev (BUD) Q2 Earnings Beat Estimates, Revenues Miss
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported better-than-anticipated earnings in second-quarter 2022, while sales marginally missed the Zacks Consensus Estimate. Earnings declined year over year, while sales improved.
The company’s mixed results reflected a continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Backed by the continued business momentum, it retained its upbeat view for 2022.
AB InBev 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. Nearly 55% of the company’s revenues are generated through the B2B digital platforms, with an active monthly user base of its proprietary B2B brand, BEES, reaching 2.9 million.
Shares of the Zacks Rank #3 (Hold) company have lost 2.2% in the past three months compared with the industry’s decline of 1.4%.
Image Source: Zacks Investment Research
Q2 Highlights
AB InBev reported normalized earnings per share (EPS) of 75 cents, which declined 21.1% from 95 cents in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of 73 cents.
Underlying EPS (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs and the impacts of hyperinflation) was 73 cents in second-quarter 2022, down 2.7% from 75 cents earned in the year-ago quarter.
Revenues of $14,793 million improved 9.3% from the year-ago quarter, marginally missing the Zacks Consensus Estimate of $14,795 million. It registered organic revenue growth of 11.3%, primarily driven by robust volume and revenue per hectoliter (hl) growth. Revenues were driven by the strong performance of its three global brands — Budweiser, Corona and Stella Artois — which advanced 9.7% outside their home markets in the second quarter.
Revenues per hl were up 7.5% on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across key markets and premiumization efforts. The total organic volume grew 3.4%, with a 2.7% increase in the own-beer volume and 8.2% growth in the non-beer volume.
AnheuserBusch InBev SANV Price, Consensus and EPS Surprise
The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed more than $425 million to the total revenues in the quarter.
The cost of sales increased 18.8% on a reported basis and 19.9% on an organic basis to $6,796 million in the second quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $5,096 million, which rose 5.2% year over year and 7.2% on an organic basis. However, the normalized EBITDA margin contracted 130 basis points (bps) to 34.5% and dipped 127 bps organically. EBITDA margins were impacted by commodity headwinds and higher supply-chain costs in some markets. This was partly offset by the increase in revenues.
SG&A expenses declined 0.2% year over year to $4,500 million and increased 4.1% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.
Outlook
For 2022, AB InBev expects EBITDA growth in line with the medium-term outlook of 4-8%. It anticipates revenue growth to be higher than EBITDA growth, driven by strong volume and pricing.
The company expects net pension interest expenses and accretion expenses of $170-$200 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2022.
Management anticipates a normalized effective tax rate of 28-30% for 2022. Net capital expenditure is projected to be $4.5-$5 billion for 2022, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Fomento Economico Mexicano (FMX - Free Report) , The Duckhorn Portfolio (NAPA - Free Report) and Brown-Forman (BF.B - Free Report) .
Fomento Economico Mexicano, alias FEMSA, currently sports a Zacks Rank of 1 (Strong Buy). FMX has a trailing four-quarter earnings surprise of 3.9%, on average. It has a long-term earnings growth rate of 8.8%. The company has declined 18.4% in the past three months.
The Zacks Consensus Estimate for FEMSA’s current financial-year sales suggests growth of 11.3%, whereas earnings estimates indicate a decline of 3.8% from the prior-year reported number. The consensus mark for FMX’s earnings per share has moved up 3.6% in the past 30 days.
Duckhorn currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 12.2%. NAPA has a trailing four-quarter earnings surprise of 94.4%, on average. The company has declined 4.7% in the past three months.
The Zacks Consensus Estimate for Duckhorn’s current financial-year sales and earnings per share suggests growth of 10.8% and 6.9%, respectively, from the year-ago reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.
Brown-Forman currently carries a Zacks Rank #2. BF.B has a trailing four-quarter earnings surprise of 8.1%, on average. The company has rallied 7.4% in the past three months.
The Zacks Consensus Estimate for Brown-Forman’s current financial year’s sales and earnings per share suggests growth of 7.2% and 14.4%, respectively, from the year-ago reported numbers. The consensus mark for BF.B’s earnings per share has been unchanged in the past 30 days.
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AB InBev (BUD) Q2 Earnings Beat Estimates, Revenues Miss
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported better-than-anticipated earnings in second-quarter 2022, while sales marginally missed the Zacks Consensus Estimate. Earnings declined year over year, while sales improved.
The company’s mixed results reflected a continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Backed by the continued business momentum, it retained its upbeat view for 2022.
AB InBev 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. Nearly 55% of the company’s revenues are generated through the B2B digital platforms, with an active monthly user base of its proprietary B2B brand, BEES, reaching 2.9 million.
Shares of the Zacks Rank #3 (Hold) company have lost 2.2% in the past three months compared with the industry’s decline of 1.4%.
Image Source: Zacks Investment Research
Q2 Highlights
AB InBev reported normalized earnings per share (EPS) of 75 cents, which declined 21.1% from 95 cents in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of 73 cents.
Underlying EPS (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs and the impacts of hyperinflation) was 73 cents in second-quarter 2022, down 2.7% from 75 cents earned in the year-ago quarter.
Revenues of $14,793 million improved 9.3% from the year-ago quarter, marginally missing the Zacks Consensus Estimate of $14,795 million. It registered organic revenue growth of 11.3%, primarily driven by robust volume and revenue per hectoliter (hl) growth. Revenues were driven by the strong performance of its three global brands — Budweiser, Corona and Stella Artois — which advanced 9.7% outside their home markets in the second quarter.
Revenues per hl were up 7.5% on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across key markets and premiumization efforts. The total organic volume grew 3.4%, with a 2.7% increase in the own-beer volume and 8.2% growth in the non-beer volume.
AnheuserBusch InBev SANV Price, Consensus and EPS Surprise
AnheuserBusch InBev SANV price-consensus-eps-surprise-chart | AnheuserBusch InBev SANV Quote
The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed more than $425 million to the total revenues in the quarter.
The cost of sales increased 18.8% on a reported basis and 19.9% on an organic basis to $6,796 million in the second quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $5,096 million, which rose 5.2% year over year and 7.2% on an organic basis. However, the normalized EBITDA margin contracted 130 basis points (bps) to 34.5% and dipped 127 bps organically. EBITDA margins were impacted by commodity headwinds and higher supply-chain costs in some markets. This was partly offset by the increase in revenues.
SG&A expenses declined 0.2% year over year to $4,500 million and increased 4.1% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.
Outlook
For 2022, AB InBev expects EBITDA growth in line with the medium-term outlook of 4-8%. It anticipates revenue growth to be higher than EBITDA growth, driven by strong volume and pricing.
The company expects net pension interest expenses and accretion expenses of $170-$200 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2022.
Management anticipates a normalized effective tax rate of 28-30% for 2022. Net capital expenditure is projected to be $4.5-$5 billion for 2022, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Fomento Economico Mexicano (FMX - Free Report) , The Duckhorn Portfolio (NAPA - Free Report) and Brown-Forman (BF.B - Free Report) .
Fomento Economico Mexicano, alias FEMSA, currently sports a Zacks Rank of 1 (Strong Buy). FMX has a trailing four-quarter earnings surprise of 3.9%, on average. It has a long-term earnings growth rate of 8.8%. The company has declined 18.4% in the past three months.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FEMSA’s current financial-year sales suggests growth of 11.3%, whereas earnings estimates indicate a decline of 3.8% from the prior-year reported number. The consensus mark for FMX’s earnings per share has moved up 3.6% in the past 30 days.
Duckhorn currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 12.2%. NAPA has a trailing four-quarter earnings surprise of 94.4%, on average. The company has declined 4.7% in the past three months.
The Zacks Consensus Estimate for Duckhorn’s current financial-year sales and earnings per share suggests growth of 10.8% and 6.9%, respectively, from the year-ago reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.
Brown-Forman currently carries a Zacks Rank #2. BF.B has a trailing four-quarter earnings surprise of 8.1%, on average. The company has rallied 7.4% in the past three months.
The Zacks Consensus Estimate for Brown-Forman’s current financial year’s sales and earnings per share suggests growth of 7.2% and 14.4%, respectively, from the year-ago reported numbers. The consensus mark for BF.B’s earnings per share has been unchanged in the past 30 days.