World: AB InBev expects continued growth opportunities in developing and emerging markets

Anheuser-Busch InBev held its Capital Markets Day on September 21 with a clear message that the beer giant expects continued growth opportunities in developing and emerging markets, as well as the potential to see margins move higher, msn.com reported.

Cowen analyst Vivian Azer said that while challenges persist in the U.S. for Anheuser-Busch InBev, there have been significant offsets in the bright spots of the Middle Americas and South America.

"Indeed, Middle Americas encapsulates the developing markets opportunity (over 50% of EBITDA), which remains a priority for ABI, as the region was the top revenue and profit driver for ABI over the last 5 years," noted Azer.

Some of the themes hammered home by Anheuser-Busch InBev management at the event were that it will stick with its core tenants to lead and grow the category, digitize and optimize the ecosystem, and optimize the business as the company continues its pivot away from M&A to organic growth. In terms of organic sales, Anheuser-Busch InBev topped expectations with a 7% increase in organic sales for Q2 despite the drop in Bud Light sales during the quarter.

Azer said that in addition to Cowen's constructive view of the growth opportunities for Anheuser-Busch InBev in developing and emerging markets, the firm sees a natural pathway to gross margin recovery, which should start to materialize in 2024 as the Belgium-based company continues to lap record commodity inflation and its hedges. Also on the positive side, AB InBev still has peer-leading free cash flow, which following more deleverage in 2024, Cowen expects will result in the introduction of share repurchases in 2025 to the benefit of investors.

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