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AB InBev (BUD) Q1 Earnings Miss Estimates, Revenues Beat
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported lower-than-anticipated earnings in first-quarter 2023 . Meanwhile, revenues surpassed the Zacks Consensus Estimate and our estimate. Earnings and sales improved year over year.
Top and bottom-line growth reflected continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Results also benefited from continued consumer demand for its brand portfolio. Backed by the continued business momentum, the company outlined its view for 2023.
Shares of the Zacks Rank #3 (Hold) company have gained 8.4% in the past three months compared with the industry’s growth of 4.8%.
Image Source: Zacks Investment Research
Q1 Highlights
AB InBev reported normalized earnings per share (EPS) and 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) of 65 cents in first-quarter 2023, up 8.3% from the 60 cents earned in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 68 cents and our estimate of 67 cents.
Revenues of $14,213 million improved 7.4% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $14,015 million and our estimate of $13,861.2 million. The company registered organic revenue growth of 13.2%, primarily driven by robust revenue per hectoliter (hl) growth. The top line benefited from pricing actions, continued premiumization and other revenue management initiatives. Accelerated digital transformation also contributed to top-line growth in the quarter.
Revenues reflected strong performances of its three global brands — Budweiser, Corona and Stella Artois — which advanced 15.4% outside their home markets in the first quarter.
Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise
Revenue per hl were up 12.4% on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across the company’s key markets and premiumization efforts. The total organic volume rose 0.9%, with a 0.4% increase in the own-beer volume and 3.6% growth in the non-beer volume.
AB InBev has been 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. The company’s digital transformation initiatives have been on track, with B2B digital platforms contributing about 62% of its revenues in the first quarter. The company noted that the monthly active user base of BEES reached 3.1 million users as of Mar 31, 2023. Its direct-to-consumer ecosystem generated more than $100 million in revenues in first-quarter 2023, reflecting low-teens growth year over year.
The company has been focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed more than $325 million to the total revenues in first-quarter 2023.
The cost of sales increased 8.8% on a reported basis and 14% on an organic basis to $6,517 million in the first quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,759 million, which rose 6.1% year over year and 13.6% on an organic basis. The increase was driven by disciplined resource allocation and overhead expense management. The normalized EBITDA margin contracted 40 basis points (bps) to 33.5% but expanded 13 bps organically.
SG&A expenses rose 5.5% year over year to $4,344 million and increased 10.3% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.
Outlook
For 2023, AB InBev expects year over year EBITDA growth of 4-8%, in line with its medium-term outlook. 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 $200-$230 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2023.
Management anticipates a normalized effective tax rate of 27-29% for 2023. Net capital expenditure is projected to be $4.5-$5 billion for 2023, 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 Vita Coco Company (COCO - Free Report) , PepsiCo Inc. (PEP - Free Report) and The Duckhorn Portfolio (NAPA - Free Report) .
Vita Coco currently carries a Zacks Rank #2 (Buy). COCO has a trailing four-quarter earnings surprise of 21.7%, on average. The company has rallied 69.4% in the past three months.
The Zacks Consensus Estimate for Vita Coco’s current financial year’s sales and earnings per share suggests growth of 10% and 178.3%, respectively, from the year-ago quarter’s reported figure. The consensus mark for COCO’s earnings has been unchanged in the past 30 days.
PepsiCo currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 7.8%. PEP has a trailing four-quarter earnings surprise of 6.3%, on average. The company has risen 11.8% in the past three months.
The Zacks Consensus Estimate for PepsiCo’s current financial year’s sales and earnings suggests growth of 4.7% and 7.4%, respectively, from the year-ago reported numbers. The consensus mark for PEP’s earnings per share has moved up 0.6% in the past seven days.
Duckhorn currently has a Zacks Rank of 2. NAPA has a trailing four-quarter earnings surprise of 13.5%, on average. It has a long-term earnings growth rate of 6.6%. The company has declined 8.8% in the past three months.
The Zacks Consensus Estimate for Duckhorn’s current financial year’s sales and earnings per share suggests growth of 8.4% and 1.6%, respectively, from the prior-year reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.
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AB InBev (BUD) Q1 Earnings Miss Estimates, Revenues Beat
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported lower-than-anticipated earnings in first-quarter 2023 . Meanwhile, revenues surpassed the Zacks Consensus Estimate and our estimate. Earnings and sales improved year over year.
Top and bottom-line growth reflected continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Results also benefited from continued consumer demand for its brand portfolio. Backed by the continued business momentum, the company outlined its view for 2023.
Shares of the Zacks Rank #3 (Hold) company have gained 8.4% in the past three months compared with the industry’s growth of 4.8%.
Image Source: Zacks Investment Research
Q1 Highlights
AB InBev reported normalized earnings per share (EPS) and 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) of 65 cents in first-quarter 2023, up 8.3% from the 60 cents earned in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 68 cents and our estimate of 67 cents.
Revenues of $14,213 million improved 7.4% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $14,015 million and our estimate of $13,861.2 million. The company registered organic revenue growth of 13.2%, primarily driven by robust revenue per hectoliter (hl) growth. The top line benefited from pricing actions, continued premiumization and other revenue management initiatives. Accelerated digital transformation also contributed to top-line growth in the quarter.
Revenues reflected strong performances of its three global brands — Budweiser, Corona and Stella Artois — which advanced 15.4% outside their home markets in the first quarter.
Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise
Anheuser-Busch InBev SA/NV price-consensus-eps-surprise-chart | Anheuser-Busch InBev SA/NV Quote
Revenue per hl were up 12.4% on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across the company’s key markets and premiumization efforts. The total organic volume rose 0.9%, with a 0.4% increase in the own-beer volume and 3.6% growth in the non-beer volume.
AB InBev has been 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. The company’s digital transformation initiatives have been on track, with B2B digital platforms contributing about 62% of its revenues in the first quarter. The company noted that the monthly active user base of BEES reached 3.1 million users as of Mar 31, 2023. Its direct-to-consumer ecosystem generated more than $100 million in revenues in first-quarter 2023, reflecting low-teens growth year over year.
The company has been focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed more than $325 million to the total revenues in first-quarter 2023.
The cost of sales increased 8.8% on a reported basis and 14% on an organic basis to $6,517 million in the first quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,759 million, which rose 6.1% year over year and 13.6% on an organic basis. The increase was driven by disciplined resource allocation and overhead expense management. The normalized EBITDA margin contracted 40 basis points (bps) to 33.5% but expanded 13 bps organically.
SG&A expenses rose 5.5% year over year to $4,344 million and increased 10.3% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.
Outlook
For 2023, AB InBev expects year over year EBITDA growth of 4-8%, in line with its medium-term outlook. 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 $200-$230 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2023.
Management anticipates a normalized effective tax rate of 27-29% for 2023. Net capital expenditure is projected to be $4.5-$5 billion for 2023, 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 Vita Coco Company (COCO - Free Report) , PepsiCo Inc. (PEP - Free Report) and The Duckhorn Portfolio (NAPA - Free Report) .
Vita Coco currently carries a Zacks Rank #2 (Buy). COCO has a trailing four-quarter earnings surprise of 21.7%, on average. The company has rallied 69.4% in the past three months.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Vita Coco’s current financial year’s sales and earnings per share suggests growth of 10% and 178.3%, respectively, from the year-ago quarter’s reported figure. The consensus mark for COCO’s earnings has been unchanged in the past 30 days.
PepsiCo currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 7.8%. PEP has a trailing four-quarter earnings surprise of 6.3%, on average. The company has risen 11.8% in the past three months.
The Zacks Consensus Estimate for PepsiCo’s current financial year’s sales and earnings suggests growth of 4.7% and 7.4%, respectively, from the year-ago reported numbers. The consensus mark for PEP’s earnings per share has moved up 0.6% in the past seven days.
Duckhorn currently has a Zacks Rank of 2. NAPA has a trailing four-quarter earnings surprise of 13.5%, on average. It has a long-term earnings growth rate of 6.6%. The company has declined 8.8% in the past three months.
The Zacks Consensus Estimate for Duckhorn’s current financial year’s sales and earnings per share suggests growth of 8.4% and 1.6%, respectively, from the prior-year reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.