AB InBev suffers in US ahead of SABMiller takeover

Anheuser-Busch InBev, which is strengthening its position as the world's largest brewer by buying SABMiller, reported lower than expected fourth-quarter earnings on Thursday as it suffered a declining US market share and margins.

The Belgium-based maker of Budweiser, Corona and Stella Artois forecast improved volumes and a better brand mix in its largest market, the United States, another strong year in Mexico, but economic challenges in Brazil and China.

AB InBev gave no new information on its planned $100 billion (€91bn) takeover of nearest rival SABMiller, saying it still expected the deal to close in the second half of this year.

Provisional sales

It has already arranged provisional sales of US and European brands to Molson Coors and Asahi respectively. Bond issues have also seen it secure funding for about $47 billion of the purchase price.

Its shares fell almost 3 per cent to €100.7 in early trading, making it among the weakest performers in the FTSEurofirst 300 index of leading European stocks.

Trevor Stirling, drinks analyst at Bernstein Securities, said the value of AB InBev stock depends on how investors view the existing business and the potential SABMiller benefits.

“There’s no new news today on SABMiller but clearly the implication is that the value of the core business is not quite as high as we thought it was yesterday,” he said.

Dividend

Despite the earnings setback, the company raised its dividend to a total of €3.60 from €3.00, compared with a market expectation of about €3.30.

“You’d think they’d be husbanding their cash and yet they’re showing distinct generosity,” said Andrew Holland, beverage analyst at SocGen, adding the company had not been clear about its dividend going forward.

The SABMiller is designed to boost the brewer in Africa and Latin American countries including Colombia and Peru when markets such as the United States are weakening as drinkers shun mainstream lagers in favour of craft brews and cocktails.

Reuters