Revenue Miss and Market Impact
Anheuser-Busch InBev SA/NV, the parent company of Bud Light, reported a 6.2% organic year-over-year increase in fourth-quarter fiscal 2023 revenue, reaching $14.473 billion. Despite this notable growth, the figure fell short of market expectations set at $15.49 billion. As a result, the company’s shares are experiencing a sharp decline.
Volume Decline and Revenue Metrics
Total volumes for the period decreased by 2.6%, with beer volumes from the company itself dropping by 3.6%, while non-beer volumes saw a 3% increase. Revenue per hectoliter showed a robust growth of 9.3%.
Operational Insights and Financial Snapshot
AB InBev highlighted that around 70% of its revenue was driven by business-to-business (B2B) digital platforms, and the digital direct-to-consumer ecosystem contributed over $550 million in revenue. However, despite these advancements, gross profit for the quarter saw a decline to $7.794 billion, with a 5.3% organic increase, leading to a slight contraction in the gross margin to 53.9%.
Normalized EBITDA experienced a 6.2% organic growth to reach $4.88 billion, with the margin remaining nearly flat at 33.7%. The underlying profit for the period stood at $1.66 billion, down from $1.74 billion a year ago. Underlying earnings per share (EPS) were recorded at $0.82, a decrease from $0.86 year-over-year but surpassing the consensus of $0.78.
US Market Challenges and Financial Position
The U.S. market posed challenges for AB InBev, with revenues declining by 17.3% year-over-year, mainly driven by a 12.1% drop in sales-to-retailers, attributed to the volume decline of Bud Light. Additionally, the net debt to normalized EBITDA ratio stood at 3.38x on December 31, 2023, compared to 3.51x the previous year.
Financial Outlook and Share Performance
Looking ahead to 2024, AB InBev anticipates EBITDA growth in alignment with the medium-term outlook of 4-8%. The company also projects capital expenditure in the range of $4 billion to $4.5 billion. Despite these plans, BUD shares are currently trading lower by 3.28% at $60.40 as of the latest trading data on Thursday.
