This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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.