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CASTLE MALTING NEWS in partnership with www.e-malt.com French
30 July, 2020



Brewing news World: AB InBev reports 17.1% volume drop in Q2 but sales in June were higher than in June 2019

Anheuser-Busch InBev, the world’s largest brewer, said on July 30 it sold more beer in June than a year earlier as drinkers celebrating the easing of lockdowns helped soften the impact of the pandemic. 

The Belgium-based brewer of Budweiser, Stella Artois and Corona said volumes declined 17.1 per cent in the second quarter from a year earlier, less severe than the 23.2 per cent that analysts had expected, while in June, volumes ticked up 0.7 per cent. 

In China — where the pandemic began and where lockdown took place earlier than elsewhere — AB InBev achieved its highest ever volume of sales in June. 

The figures helped send the company’s shares up 11 per cent to €52 in early trading as investors took heart from the recovery in sales.
 
Simon Hales, analyst at Citi, said: “It has been a long time since AB InBev has produced results which have beaten expectations in so many geographies.” 

AB InBev said it had “position[ed] our markets for a strong and swift recovery”, but cautioned: “Improvements may be impacted by the re-implementation of restrictions in certain markets, such as the restrictions imposed [on alcohol sales] in South Africa in July.” 

In a mark of the pandemic’s impact, however, AB InBev took a $2.5bn writedown on the value of its operations, relating to the company’s African units acquired with the purchase of rival SABMiller four years ago. 
 
In a “worst-case scenario” from the pandemic these units would be worth less than their previous book value, AB InBev said on July 30.
 
Lower sales pushed down normalised first-half profits to $76m from $4.7bn a year earlier, on revenues of $21.3bn — down 12 per cent. Restrictions prompted by coronavirus have sharply cut into sales at the world’s largest brewers. Heineken earlier this month booked an impairment charge of €550m and said operating profit had dropped by more than half for the first half of the year.

Carlsberg, however, also said sales had rebounded strongly in the second quarter.
 
AB InBev’s shares have sharply underperformed rivals this year, losing 35.8 per cent of their value ahead of the July 30 figures, partly because of worries about its debt levels resulting from a series of acquisitions.The group said net debt amounted to $87.4bn by the end of June, down from $95.5bn at the start of the year after the company sold its Australian operations. In June the company repaid a $9bn revolving credit facility that it drew down in March. 

But its closely watched leverage ratio — net debt to normalised earnings before interest, tax, depreciation and amortisation — was up to 4.86 times, up from 4 times at the start of the year and far above a target of 2 times. 

AB InBev also logged net finance costs of $4.2bn in the first half, up from $1.4bn a year earlier, as mark-to-market losses related to hedging of the company’s share-based payment programmes escalated. These losses, linked to generous bonuses paid in shares, came to $1.7bn, compared with a gain of $1.1bn a year earlier.  





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