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AB InBev (BUD) Surpasses Earnings & Revenue Estimates in Q1
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported solid results in first-quarter 2024. The company’s revenues and earnings beat the Zacks Consensus Estimate and improved 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 lost 4.7% in the past year compared with the industry’s decline of 14.5%.
Image Source: Zacks Investment Research
Q1 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 75 cents in first-quarter 2024, up 15.4% from the 65 cents earned in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 72 cents. On an organic basis, the underlying EPS rose 16% year over year on slight EBITDA growth, margin expansion and the optimization of net finance costs.
Revenues of $14.5 billion increased 2.3% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $14,407 million. The company registered organic revenue growth of 2.6%, primarily driven by robust revenue per hectoliter (hl) growth and revenue growth in 75% of 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 megabrands — Budweiser, Corona, Stella Artois, Corona and Michelob Ultra — which collectively advanced 6.7% year over year outside their home markets in the first quarter. This growth was led by a 15.5% rise in Corona outside of its home markets.
Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise
Revenue per hl improved 3.3% year over year on an organic basis, backed by revenue-management initiatives and premiumization efforts. However, the company’s total organic volume dipped 0.6% as the declines in the APAC and North America regions were offset by growth in the Middle Americas, South America, Africa and Europe. The total organic volume included a 1.3% decline in the own-beer volume, offset by 3.5% 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 first quarter. The company noted that the monthly active user base of BEES reached 3.6 million users in first-quarter 2024. Its omni-channel, direct-to-consumer ecosystem of digital and physical products generated $350 million in revenues in the reported quarter.
BUD has been focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed $320 million to the total revenues in the first quarter.
The cost of sales increased 2.1% on a reported basis and 2.5% on an organic basis to $6.7 billion in the first quarter. SG&A expenses rose 2.1% year over year to $4.4 billion and increased 1.4% on an organic basis.
Our model had predicted the cost of sales to decrease 1% for the first quarter, with a decline of 90 basis points (bps) in the cost-of-sales rate to 45%. The SG&A expense rate was anticipated to decline 20 bps to 30.4%. In dollar terms, SG&A expenses were expected to increase 0.3% year over year in the first quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4.99 billion, which improved 4.8% year over year on a reported basis and 5.4% on an organic basis. The normalized EBITDA margin expanded 80 bps year over year on a reported basis and 90 bps organically to 34.3%. The organic EBITDA margin benefited from disciplined overhead management resulting in higher sales and marketing investments for its brands.
We anticipated the normalized EBITDA to increase 3.8% year over year to $4.9 billion. Meanwhile, the normalized EBITDA margin was expected to expand 90 bps to 34.4% in the first quarter.
Outlook
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 The Vita Coco Company, Inc. (COCO - Free Report) , PepsiCo Inc. (PEP - Free Report) and Coca-Cola FEMSA (KOF - Free Report) .
Vita Coco, which produces, markets and distributes coconut water products under the Vita Coco brand name, currently flaunts a Zacks Rank #1 (Strong Buy). COCO has a trailing four-quarter earnings surprise of 25.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vita Coco’s current fiscal-year sales and earnings suggests growth of 3.5% and 37.8%, respectively, from the year-ago reported numbers.
PepsiCo, a leading global food and beverage company, currently carries a Zacks Rank #2 (Buy). PEP has a trailing four-quarter earnings surprise of 5.1%, on average.
The Zacks Consensus Estimate for PepsiCo’s current fiscal-year sales and earnings suggests growth of 3.4% and 7.1%, respectively, from the year-ago reported figures.
Coca-Cola FEMSA, which produces, markets and distributes soft drinks throughout the metropolitan area of Mexico City, has a Zacks Rank #2 at present. KOF delivered a negative earnings surprise of 1.3% in the last reported quarter.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year sales and earnings suggests growth of 10.7% and 25.1%, respectively, from the year-ago reported numbers.
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AB InBev (BUD) Surpasses Earnings & Revenue Estimates in Q1
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported solid results in first-quarter 2024. The company’s revenues and earnings beat the Zacks Consensus Estimate and improved 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 lost 4.7% in the past year compared with the industry’s decline of 14.5%.
Image Source: Zacks Investment Research
Q1 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 75 cents in first-quarter 2024, up 15.4% from the 65 cents earned in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 72 cents. On an organic basis, the underlying EPS rose 16% year over year on slight EBITDA growth, margin expansion and the optimization of net finance costs.
Revenues of $14.5 billion increased 2.3% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $14,407 million. The company registered organic revenue growth of 2.6%, primarily driven by robust revenue per hectoliter (hl) growth and revenue growth in 75% of 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 megabrands — Budweiser, Corona, Stella Artois, Corona and Michelob Ultra — which collectively advanced 6.7% year over year outside their home markets in the first quarter. This growth was led by a 15.5% rise in Corona outside of its home markets.
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 improved 3.3% year over year on an organic basis, backed by revenue-management initiatives and premiumization efforts. However, the company’s total organic volume dipped 0.6% as the declines in the APAC and North America regions were offset by growth in the Middle Americas, South America, Africa and Europe. The total organic volume included a 1.3% decline in the own-beer volume, offset by 3.5% 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 first quarter. The company noted that the monthly active user base of BEES reached 3.6 million users in first-quarter 2024. Its omni-channel, direct-to-consumer ecosystem of digital and physical products generated $350 million in revenues in the reported quarter.
BUD has been focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed $320 million to the total revenues in the first quarter.
The cost of sales increased 2.1% on a reported basis and 2.5% on an organic basis to $6.7 billion in the first quarter. SG&A expenses rose 2.1% year over year to $4.4 billion and increased 1.4% on an organic basis.
Our model had predicted the cost of sales to decrease 1% for the first quarter, with a decline of 90 basis points (bps) in the cost-of-sales rate to 45%. The SG&A expense rate was anticipated to decline 20 bps to 30.4%. In dollar terms, SG&A expenses were expected to increase 0.3% year over year in the first quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4.99 billion, which improved 4.8% year over year on a reported basis and 5.4% on an organic basis. The normalized EBITDA margin expanded 80 bps year over year on a reported basis and 90 bps organically to 34.3%. The organic EBITDA margin benefited from disciplined overhead management resulting in higher sales and marketing investments for its brands.
We anticipated the normalized EBITDA to increase 3.8% year over year to $4.9 billion. Meanwhile, the normalized EBITDA margin was expected to expand 90 bps to 34.4% in the first quarter.
Outlook
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 The Vita Coco Company, Inc. (COCO - Free Report) , PepsiCo Inc. (PEP - Free Report) and Coca-Cola FEMSA (KOF - Free Report) .
Vita Coco, which produces, markets and distributes coconut water products under the Vita Coco brand name, currently flaunts a Zacks Rank #1 (Strong Buy). COCO has a trailing four-quarter earnings surprise of 25.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vita Coco’s current fiscal-year sales and earnings suggests growth of 3.5% and 37.8%, respectively, from the year-ago reported numbers.
PepsiCo, a leading global food and beverage company, currently carries a Zacks Rank #2 (Buy). PEP has a trailing four-quarter earnings surprise of 5.1%, on average.
The Zacks Consensus Estimate for PepsiCo’s current fiscal-year sales and earnings suggests growth of 3.4% and 7.1%, respectively, from the year-ago reported figures.
Coca-Cola FEMSA, which produces, markets and distributes soft drinks throughout the metropolitan area of Mexico City, has a Zacks Rank #2 at present. KOF delivered a negative earnings surprise of 1.3% in the last reported quarter.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year sales and earnings suggests growth of 10.7% and 25.1%, respectively, from the year-ago reported numbers.