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

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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported dismal results in fourth-quarter 2023. The company’s earnings beat the Zacks Consensus Estimate, while revenues missed. Sales and earnings declined on a year-over-year basis.

Top and bottom-line growth reflected a positive 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 ongoing business momentum, the company outlined its view for 2024.

Shares of the Zacks Rank #3 (Hold) company have gained 3.6% in the past year against the industry’s decline of 1.4%.


Zacks Investment Research
Image Source: Zacks Investment Research


Q4 Highlights

AB InBev reported an 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 82 cents in fourth-quarter 2023, down 4.7% from the 86 cents earned in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 76 cents.

Revenues of $14.5 billion moved down 1.3% from the year-ago quarter. However, revenues missed the Zacks Consensus Estimate of $15,343 million. The company registered organic revenue growth of 6.2%, primarily driven by robust revenue per hectoliter (hl) growth and improvement of more than 85% in its markets. Revenues 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 global brands — Budweiser, Corona, Stella Artois, Corona and Michelob Ultra — which collectively advanced 24.6% year over year outside their home markets in the fourth quarter.

Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise


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 moved up 9.3% year over year on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across the company’s key markets and premiumization efforts. However, the company’s total organic volume declined 2.6%. The total organic volume included a 3.6% dip in the own-beer volume, offset by 3% 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 70% to its revenues in the fourth quarter. The company noted that the monthly active user base of BEES reached 3.7 million users as of Dec 31, 2023. Its omni-channel, direct-to-consumer ecosystem of digital and physical products generated $1.5 billion in revenues in 2023.

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 $1.5 billion to the total revenues in 2023.

The cost of sales increased 0.3% on a reported basis and 7.4% on an organic basis to $6.7 billion in the fourth quarter. SG&A expenses declined 1.2% year over year to $4.5 billion and increased 4.3% on an organic basis.

Our model had predicted the cost of sales to increase 2.6% for the fourth quarter, with a decline of 110 basis points (bps) in the cost-of-sales rate to 44.3%. The SG&A expense rate was anticipated to decline 60 bps to 30.7%. In dollar terms, SG&A expenses were expected to increase 3% year over year in the fourth quarter.

The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4.9 billion, which improved 1.4% year over year on a reported basis and 6.2% on an organic basis. The normalized EBITDA margin was flat on a reported basis and declined 2 basis points (bps) organically to 33.7%. The decline in organic EBITDA can be attributed to the ongoing commodity cost headwinds, and increased sales and marketing investments.

We anticipated the normalized EBITDA to increase 14.5% year over year to $5.7 billion. Meanwhile, the normalized EBITDA margin was expected to expand 300 bps to 36.7% in the fourth quarter.


For 2024, AB InBev expects year-over-year EBITDA growth of 4-8%, in line with its medium-term outlook. The company expects net pension interest expenses and accretion expenses of $220-$250 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2024.

Management expects a normalized effective tax rate of 27-29% for 2024. Net capital expenditure is projected to be $4-$4.5 billion for 2024, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.

Stocks to Consider

We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Molson Coors (TAP - Free Report) , Fomento Economico Mexicano (FMX - Free Report) and Lamb Weston (LW - Free Report) .

Molson Coors, a leading beverage company, currently flaunts a Zacks Rank #1 (Strong Buy). TAP has a trailing four-quarter earnings surprise of 37.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Molson Coors’ current fiscal-year sales and earnings suggests growth of 1.3% and 4.2%, respectively, from the year-ago reported numbers.

Fomento Economico Mexicano, alias FEMSA, participates in the beverage industry through Coca-Cola FEMSA, which is the world’s largest franchise bottler for Coca-Cola products. It currently sports a Zacks Rank #1. FMX has a trailing four-quarter earnings surprise of 46.3%, on average.

The Zacks Consensus Estimate for FEMSA’s current fiscal-year sales suggests growth of 4.2% from the year-ago reported figure. Meanwhile, the consensus mark for earnings suggests a year-over-year decline of 3.4%.

Lamb Weston, which offers frozen potato products, has a Zacks Rank #2 (Buy) at present. LW delivered an earnings surprise of 28.8% in the last reported quarter.

The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 26.9%, respectively, from the year-ago reported numbers.

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