AB InBev underperforms for seventh straight quarter

AB InBev has had a disappointing fiscal year 2016, even so much so that the beer giant will cancel bonusses for its management team. For the seventh time in a row, both its turnover and operational income were below analysts’ expectations.

“Performance has been disappointing”

AB InBev is clear about the situation: “When we do not meet our objectives, we take responsibility for it. Performance has been disappointing in 2016, and as a result, most of the Executive Board of Management will not receive bonuses this year.” The last time bonusses were cut, was in 2008.

Despite a 2 % volume drop to 500 million hectoliters, turnover grew 2.4 % to 45.5 billion dollars (43.2 billion euro). On the other hand, AB InBev’s EBITDA dropped 0.1 % to 16.8 billion dollars (16 billion euro). Both numbers were not in line with analyst expectations, which stood at 45.6 billion dollars in turnover and 17 billion dollars in EBITDA. Financial press agency Bloomberg calculated this was AB InBev’s seventh straight underperforming quarter.

Brazil poses biggest problem

“Brazil beer volumes were down, revenues suffered and costs of sales rose compared with 2015 due to devaluation of the Brazilian Real”, the company mentions in its letter to shareholders. The entire beer industry faces this same issue, but seeing how AB InBev is the market leader, it suffers the most: market share dropped to 66.3 % and volumes in China, South Africa, Colombia and the United States also dropped. It fared a lot better in Mexico (with more than 10 % growth) and in Europe (+ 4.5 %).

“Even though we recognize the increased volatility of several key markets, we expect total turnover growth to speed up in 2017”, AB InBev boasts. The SABMiller acquisition should help boost its profit and the board is confident that it can save up to 2.8 billion dollars in costs over the next four years thanks to synergies. Previously, it had targeted 2.45 billion dollars.