To what extent can premiumization and acquisition synergies affect BUD's first quarter 2019 results?

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Anheuser-Busch InBev (NYSE: BUD) is expected to announce its first quarter results of 2019 on May 07, 2019, followed by a conference call with badysts. The Company's revenues have experienced significant volatility in the previous four quarters, primarily due to the benefits of continued premiumization, offset by lower market share for its flagship brands Budweiser and Bud Light. We expect revenues to decrease by approximately 4% to 5% in the first quarter of 2019, mainly due to the poor performance of Latin America South, led by Argentina, and soft beer sales in the US consumers preferring healthier options like wine. Earnings are expected to increase from one year to the next, reflecting the effects of premiumization and synergies from the SABMiller acquisition, partially offset by marketing and selling prices. higher raw materials.

We summarized the key expectations of the announcement in our interactive dashboard: How should Anheuser-Busch InBev behave in the first quarter of 2019 and what are the prospects for the year as a whole? Plus, here's more Basic consumables.

Overview of BUD revenue sources

The BUD reported total revenues of $ 54.62 billion for the 2018 fiscal year. These revenues included 4 main revenue sources:

• Latin America: BUD's local and international beer brand recipes in Colombia, Honduras, Mexico, Peru, Cuba, Brazil, Argentina and many other countries in North, South and South America. West accounted for about 40% of total revenue.
• North America: Contributed 29% of revenues in 2018. This division includes BUD operations in the United States and Canada. In addition, it also includes the Global Export and Holding business, which includes the company's head office and the countries in which the products are sold solely for export, where Anheuser does not engage in any activity or production activity.
• EMEA (Europe, Middle East and Africa): 15% of turnover in 2018. This includes the sale of global and local beer brands in the UK, Ireland, France, Italy, Spain, Russia and export activities in Europe and the Middle East.
• Asia Pacific: BUD revenues in Australia, China, India, Japan, New Zealand, South Korea, Vietnam, and other South and Southeast Asian countries accounted for 16% of income.

Key factors to watch for in the first quarter of 2019

A]Revenue trend

Latin America

• The sector's revenues were volatile, driven by strong volume growth in Western Latin America, offset by widespread pressures on the North and South, as a result of the changing composition of consumption. and macroeconomic challenges in Argentina and Peru.
• We expect the sector to continue its healthy growth throughout 2019, as a result of Corona and Victoria's rise, as well as successful initiatives in the beer category, led by Pilsener and Club. Premium, and the continued growth of global brands.
• In addition, the launch of two new beer brands – Nossa and Magnifica – and the increased market share of Patagonia are expected to contribute to revenue growth.

North America

• Revenues in the region have decreased in the last 3 quarters due to lower volumes, mainly due to Budweiser's soft beer demand and Budweiser's loss of 80 basis points and 35 basis points.
• We expect revenue in the segment to remain stable in 2019, driven by lower volumes, offset by growth in the Michelob Ultra Pure Gold, Bud Light Orange and Budweiser Reserve series.

EMEA Revenue (Europe, Middle East and Africa)

• Revenues were affected in 2018 due to the deconsolidation of Coca-Cola Beverages Africa and the decline in beer sales.
• Revenues are expected to increase in the future, due to the growing share of Corona and the creation of a new brewery in Nigeria.

Asia Pacific

• Revenues declined in the previous three quarters due to lower demand in Australia.
• Sales in this segment are expected to increase in the coming years as premiumization ramps up and the overall performance of the company's e-commerce business is strong.

B]Profitability

• After increasing in the second quarter of 2018, net profit margin decreased in the following two quarters, driven by higher total expenses, higher effective tax rate and higher cost of interest.
• The increase in the effective tax rate in the second half of 2018 is due to higher non-deductible market value losses and changes in tax legislation in some of the countries in which the company operates.
• Financial expense has increased relative to recent quarters due to higher interest expense, financing of the acquisition of SABMiller and mark-to-market losses on derivative instruments issued to hedge the shares issued in combination Grupo Modelo and SAB. .
• Net profit margin is expected to increase in the future as a result of increased premiumization and synergies from recent consolidation.

Outlook for the full year

• We expect revenues to increase by 1.9% to approximately $ 55.6 billion in 2019. The increase in revenues would result primarily from the company's focus and initiatives to double sales of its premium brands in the near future.
• Net profit margin is expected to increase from 12.4% in 2018 to approximately 16% in 2019, due to synergies from the acquisition and reduction of interest expense due to BUD's attention to deleveraging.
• New bond issues of $ 15.5 billion in February 2019 to absorb its existing higher interest rate debt are expected to contribute to growth in the Company's net income.

Trefis estimates the price of BUD shares at USD 90 per share. We believe that stock price growth would be driven by higher sales in emerging markets and by the synergies and productivity savings achieved through acquisitions, coupled with the company's willingness to reduce debt, which would translate into better margins in the medium term. .

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For CFO and financial teams | Product, R & D and Marketing Teams

All data Trefis

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Anheuser-Busch InBev (NYSE: BUD) is expected to announce its first-quarter results in 2019 on May 07, 2019, followed by a conference call with badysts. The Company's revenues have experienced significant volatility in the previous four quarters, primarily due to the benefits of continued premiumization, offset by lower market share for its flagship brands Budweiser and Bud Light. We expect revenues to decrease by approximately 4% to 5% in the first quarter of 2019, mainly due to the poor performance of Latin America South, led by Argentina, and soft beer sales in the US consumers preferring healthier options like wine. Earnings are expected to increase from one year to the next, reflecting the effects of premiumization and synergies from the SABMiller acquisition, partially offset by marketing and selling prices. higher raw materials.

We have summarized the key expectations of this announcement in our interactive dashboard – how should Anheuser-Busch InBev come out in the first quarter of 2019 and what are the prospects for the full year? ;year? In addition, here is more data on consumer staples.

Overview of BUD revenue sources

The BUD reported total revenues of $ 54.62 billion for the 2018 fiscal year. These revenues included 4 main revenue sources:

• Latin America: BUD's local and international beer brand recipes in Colombia, Honduras, Mexico, Peru, Cuba, Brazil, Argentina and many other countries in North, South and South America. West accounted for about 40% of total revenue.
• North America: Contributed 29% of revenues in 2018. This division includes BUD operations in the United States and Canada. In addition, it also includes the Global Export and Holding business, which includes the company's head office and the countries in which the products are sold solely for export, where Anheuser does not engage in any activity or production activity.
• EMEA (Europe, Middle East and Africa): 15% of turnover in 2018. This includes the sale of global and local beer brands in the UK, Ireland, France, Italy, Spain, Russia and export activities in Europe and the Middle East.
• Asia Pacific: BUD revenues in Australia, China, India, Japan, New Zealand, South Korea, Vietnam, and other South and Southeast Asian countries accounted for 16% of income.

Key factors to watch for in the first quarter of 2019

A]Revenue trend

Latin America

• The sector's revenues were volatile, driven by strong volume growth in Western Latin America, offset by widespread pressures on the North and South, as a result of the changing composition of consumption. and macroeconomic challenges in Argentina and Peru.
• We expect the sector to continue its healthy growth throughout 2019, as a result of Corona and Victoria's rise, as well as successful initiatives in the beer category, led by Pilsener and Club. Premium, and the continued growth of global brands.
• In addition, the launch of two new beer brands – Nossa and Magnifica – and the increased market share of Patagonia are expected to contribute to revenue growth.

North America

• Revenues in the region have decreased in the last 3 quarters due to lower volumes, mainly due to Budweiser's soft beer demand and Budweiser's loss of 80 basis points and 35 basis points.
• We expect revenue in the segment to remain stable in 2019, driven by lower volumes, offset by growth in the Michelob Ultra Pure Gold, Bud Light Orange and Budweiser Reserve series.

EMEA Revenue (Europe, Middle East and Africa)

• Revenues were affected in 2018 due to the deconsolidation of Coca-Cola Beverages Africa and the decline in beer sales.
• Revenues are expected to increase in the future, due to the growing share of Corona and the creation of a new brewery in Nigeria.

Asia Pacific

• Revenues declined in the previous three quarters due to lower demand in Australia.
• Sales in this segment are expected to increase in the coming years as premiumization ramps up and the overall performance of the company's e-commerce business is strong.

B]Profitability

• After increasing in the second quarter of 2018, net profit margin decreased in the following two quarters, driven by higher total expenses, higher effective tax rate and higher cost of interest.
• The increase in the effective tax rate in the second half of 2018 is due to higher non-deductible market value losses and changes in tax legislation in some of the countries in which the company operates.
• Financial expense has increased relative to recent quarters due to higher interest expense, financing of the acquisition of SABMiller and mark-to-market losses on derivative instruments issued to hedge the shares issued in combination Grupo Modelo and SAB. .
• Net profit margin is expected to increase in the future as a result of increased premiumization and synergies from recent consolidation.

Outlook for the full year

• We expect revenues to increase by 1.9% to approximately $ 55.6 billion in 2019. The increase in revenues would result primarily from the company's focus and initiatives to double sales of its premium brands in the near future.
• Net profit margin is expected to increase from 12.4% in 2018 to approximately 16% in 2019, due to synergies from the acquisition and reduction of interest expense due to BUD's attention to deleveraging.
• New bond issues of $ 15.5 billion in February 2019 to absorb its existing higher interest rate debt are expected to contribute to growth in the Company's net income.

Trefis estimates the price of BUD shares at USD 90 per share. We believe that stock price growth would be driven by higher sales in emerging markets and by the synergies and productivity savings achieved through acquisitions, coupled with the company's willingness to reduce debt, which would translate into better margins in the medium term. .

What is behind Trefis? Find out how this feeds new collaboration and badumptions

For CFO and financial teams | Product, R & D and marketing teams

All data Trefis

Do you like our cards? Explore examples of interactive dashboards and create your own.