AB InBev Profit Rises but Struggles in Brazil, U.S. Continue -- Update

By Nick KostovFeaturesDow Jones Newswires

Anheuser-Busch InBev NV, the world's largest brewer by sales, reported a sharp rise in net profit but said it continued to struggle in the U.S. and Brazil, its two largest markets.

The maker of Budweiser, Stella Artois and Corona said net profit surged to $1.41 billion in the three months to the end of March from $132 million a year earlier. The figure was boosted by the integration of rival SABMiller following a $100 billion-plus acquisition, a deal that led to funding costs that hit AB InBev's year-earlier profit. Revenue in the quarter rose 3.7% on an organic basis to $12.92 billion.

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Shares in the company rose 3% on Thursday morning trading.

Facing a decline in the popularity of its biggest brands in the U.S. and Western Europe, AB InBev acquired SABMiller last year, making a huge bet that it could instead tap new growth in Africa and other emerging markets like Colombia and Peru.

But it has struggled in some of its core markets. In the U.S., the brewer said revenue declined as both Bud Light and Budweiser lost market share, sending core profit lower. Margins increased, however, as the company's portfolio of more-expensive beers including Michelob Ultra and Stella Artois performed well.

In Brazil, despite what the company described as a challenging political and macroeconomic environment, beer volumes rose, but revenue per hectoliter dropped because large state tax increases last year haven't yet been fully passed on to customers.

The company said it remains optimistic about Brazil in the long run and expects the rise in the cost of sales to slow in the second half of the year.

U.K. sales rose by a double-digit percentage, lifted by the launch of Bud Light, while the company also posted a strong start to the year in China, where revenue rose 11%.

"After a period of weak results, this is much better from the global beer leader," said Eamonn Ferry, an analyst at Exane BNP Paribas. "The performance was achieved despite a negative drag from Easter and a weak performance from Brazil, where performance should pick up materially as we progress through the year."

The company said its full-year expectations remained unchanged, including an acceleration of revenue growth.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

May 04, 2017 04:06 ET (08:06 GMT)