AB InBev slashes dividend to reduce debt

To acquire its rival SABMiller two years ago the brewer took on a lot of debt to finance the deal, which has forced the company to slash its dividend in half in a bid to deleverage.

Ab InBev Factory
Source: Bloomberg

Anheuser-Busch InBev (AB InBev) has slashed its dividend in half in a bid to deleverage the business to around a 2x net debt to EBITDA ratio after the company took over $100 billion to finance its acquisition of rival SABMiller.

The company said that it is ‘prioritising debt repayment’, with the board approving an annual dividend of €1.80 a share, which represents a 50% cut for shareholders but translates into a $4 billion saving that will help the business deleverage.

AB InBev said that it expects dividends to grow over time, but that ‘growth in the short term is expected to be modest given the importance of deleveraging’.

AB InBev earnings fall short

The brewer reported third quarter revenues of $13.3 billion and EBITDA of $5.3 billion, falling a touch short on analysts’ estimates, with the company blaming ‘macroeconomic challenges’ in key markets like Brazil, Argentina and South Africa for its slightly disappointing results.

However, its global brands performed, with revenue growth of 7.7% globally and 10.6% outside of their home markets, where the beverages benefit from a slight price premium, the company said.

Budeweiser performed particularly well, enjoying the spoils of becoming the global sponsor for the FIFA World Cup 2018 in Russia, with revenue growth of 9.3% outside of the US market.

But it was Corona that came out on top, with the bottled beer brand recording revenue growth of 18% outside of its native Mexico, with sales driven by China, Columbia and the UK.

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