AB InBev withdraws earnings outlook, and Pernod forecasts 20% drop in profit
Scale of coronavirus crisis forces companies to revise expectations
Last month AB InBev predicted its worst quarter in a decade as it factored in the impact from China’s lockdown at the beginning of the year. Photograph: Justin Tallis/AFP/Getty Images
AB InBev had forecast earnings growth of as much as 5 per cent in February, but the scale and magnitude of the virus forced the company to abandon that target, the world’s largest brewer said on Tuesday. The disease is present in almost every country, the World Health Organisation said Monday.
Businesses big and small have been hit by the outbreak, which has upended lives and social norms across the globe. Many countries have ordered bars and restaurants to shut to try to slow the spread of Covid-19.
Companies from plane-maker Airbus to retailer Macy’s have withdrawn earnings forecasts and suspended dividends, citing the uncertainty the public health emergency presents.
Pernod said it gets a quarter of its revenue from bars and restaurants, and it has forecasting that business will be absent from mid-March through June. The company expects a slow recovery in China to start next month, and sales from duty-free and shops in travel locations will drop 80 per cent in the five months through June.
The bleaker outlooks show that the industry isn’t banking on any uplift from alcohol hoarding.
Last month AB InBev predicted its worst quarter in a decade as it factored in the impact from China’s lockdown at the beginning of the year, and its CEO Carlos Britto’s annual bonus was cut. Now, as China slowly recovers, the virus is wreaking havoc on the rest of the world; the UK ordered pubs to shut last week, and Hong Kong on Monday banned restaurants and bars from serving alcohol.
The brewer is starting to produce hand sanitiser and disinfectants as part of virus-relief efforts.
AB InBev also pushed back the closing date for the $11 billion sale of its Australian operation Carlton and United Breweries to Japan’s Asahi Group Holdings Ltd because it remains under review by Australian competition regulators.
The deal is now expected to close in the second quarter, the beer-maker said. – Bloomberg