Cans of AB InBev Budweiser and Bud Light brand beer at a store in the borough of Queens, New York, February 28, 2024.
Bloomberg | getty images
stocks in belgium AB InBev Bud Light rose 4% on Wednesday after the company reported higher sales and profits in the first quarter, with analysts saying it has suffered relatively little from a yearlong boycott of its brand.
The world’s largest brewer, whose brands include Corona and Stella Artois, reported first-quarter sales of $14.55 billion, up 2.6% year over year, narrowly beating analyst estimates. This was despite the brewer’s sales falling 0.6%.
Basic profit attributable to shareholders was $1.5 billion, higher than the consensus compiled by LSEG.
A social media-led campaign for Bud Light was launched in April 2023 in response to its sponsorship partnership with transgender influencer Dylan Mulvaney, and this quarter is likely to be negatively impacted year-over-year.
Former US President Donald Trump took to social media in February to urge his followers to give the company a ‘second chance’.
The outrage derailed the brand’s status as America’s best-selling beer, but also sparked criticism of the company for failing to support Mulvaney. This has sparked widespread discussion in the advertising industry about how companies fear backlash for promoting diversity or inclusion.
Jason Warner, AB InBev’s European CEO, told Britain’s Telegraph newspaper earlier this week that the drinks company would “remain on our path” following the response to its campaign to reach a wider range of consumers. “It is,” he said.
Nonetheless, the company increased its revenue by 7.8% last year, driven by increased sales in Asia Pacific and Central America.
First-quarter results show that AB InBev’s North American sales of its own beer brands fell 11.1%, largely due to Bud Light. Meanwhile, in China, sales decreased by 6.2% and sales also decreased by 2.7%. The decline coincides with a broader industry setback last year due to China’s economic reopening and bad weather in March, the company said.
However, sales were at record highs in Brazil and Colombia, and growth was also strong in Europe, Mexico and South Africa. The results also indicated growth for the Corona brand, particularly non-alcoholic beer brand Corona Cero.
‘There are almost no bruises’
AB InBev reiterated its medium-term outlook for earnings before interest, taxes, depreciation and amortization (EBITDA) of 4% to 8%.
“The strength of our beer category, our diversified global presence and the continued momentum of our megabrands delivered another quarter of broad-based sales and bottom-line growth,” CEO Michel Doukeris said in a statement. “He said.
“The results were solid at the start of the year,” Barclays analysts said in a note.
“Bud Light continues to weigh results, but this is the last quarter to be significantly impacted. From here on out, everything is easy (comparison),” they said. The company added, “We got through our most difficult quarter with virtually zero costs.” No bruises.”
“We are optimistic that we will see significant improvement in our balance sheet at the end of the year and improvements throughout the year in both revenue and expenses, with the potential for increased repurchases.”
Meanwhile, RBC Europe analysts raised their price target on the stock to 75 euros ($80.59) from 73 euros. They said the earnings were “satisfactorily dull” with the potential to restore AB InBev’s status as a “consistent compounder.”
“We have passed the anniversary of the Bud Light incident and do not expect a significant rebound, but we believe the lack of resistance, which represents about 10% of U.S. volume, could further compensate for investor perception,” analyst James Edwardes Jones said in a note. said.
