File photo: Eric Vidal File photo: Eric Vidal
London - Anheuser-Busch
InBev CEO Carlos Brito will miss out on a bonus for the first time since 2008
after earnings at the Budweiser maker missed analysts’ estimates for a seventh
straight quarter.
CFO Luis Dutra will
also get nothing from the bonus pool, the Leuven, Belgium-based company said
Thursday as it announced an increase to its cost-saving target that left some
analysts disappointed. The stock fell as much as 3.3 percent in Brussels.
It’s “another shocker,
but that’s the trough,” wrote Eamonn Ferry, an analyst at Exane BNP Paribas.
“We had feared the worst this quarter, and so it is. There may well be an
element of kitchen-sinking here.”
Fourth-quarter
results missed estimates at almost all levels as the brewer continues to
struggle with a slump in its key market of Brazil. The figures provide a
reminder of why it paid $103 billion for main rival SABMiller. AB InBev on
Thursday raised its target for savings from the acquisition by $350 million to
$2.8 billion within three to four years, although some analysts had expected an
increase of $600 million.
Adjusted
fourth-quarter earnings before interest, tax, depreciation and amortization
fell to $5.25 billion, the brewer said in a statement. Analysts expected $5.64
billion.
Spending power in
Brazil, AB InBev’s largest market after the US, is nosediving amid record rates
of unemployment, bedeviling consumer-goods makers including Nestle SA and
Unilever. Lower shipments and a decline in AB InBev’s market share led to a 33
percent drop in earnings in that country. The maker of Stella Artois also
warned that dividend growth will be modest as it reins in its $108 billion
debt.
“Brazil is probably
one of the most competitive markets we operate in,” Dutra said on a call with
reporters.
Read also: AB InBev to invest R610m in raising hop production
Incomes in the
country should rise in 2017, which will be positive for beer consumption, the
CFO said. Still, the brewer forecast headwinds from Brazil’s weak currency to
weigh on first-half results.
Dutra said results
tend to rebound the year after management forgoes bonuses.
“This is the time
when our leaders rise to the occasion,” he said. “Rather than being
demotivated, we are usually more energized and perform better.”
The brewer said it
aims for net debt of about about 2 times Ebitda within a few years, after that
ratio rose to 5.5 times at the end of last year.
AB InBev forecast
revenue growth to accelerate in 2017 Brewer to cut capex to about $3.7 billion
this year after spending $4.8 billion in 2016 Cost of sales per hectoliter
forecast to increase by low single digits on constant geographic basis