Anheuser-Busch InBev ($ABI, ANH.JO) has reported a challenging third quarter, with declining volumes in both China and Argentina influencing its revenue, resulting in a share price drop of nearly 5% in midmorning trading. The latest update revealed that revenue for the quarter ending Sept. 30 reached $15.05 billion, falling short of analyst expectations, which were stable at $15.57 billion from the previous year. The weaker consumer environment in China and Argentina led to an organic volume decline of 2.4%, a steeper drop than the anticipated 0.4% decrease.
Specifically, beer volumes decreased by 3.1%, while non-beer volumes saw a modest increase of 0.6%. Despite these setbacks, ABI outperformed the industry due to a resilient beer market, claiming to have either gained or maintained market share in 60% of its markets and announcing volume increases in 50%. Organically, the revenue for the third quarter grew by 2.1%, primarily driven by a stronger-than-expected performance in North America, aided by an extra trading day.
However, this growth fell short of the 3.4% consensus estimate. From a profit standpoint, the company showed an improvement, with profit attributable to equity holders rising to $2.07 billion, up from $1.47 billion in the prior year, surpassing the Visible Alpha consensus estimate of $1.86 billion. This growth in profit is attributed to the successful performance of its megabrands and effective execution of its major platforms, combined with an increase in net revenue per 100 liters. Normalized EBITDA saw a slight decline to $5.42 billion from $5.43 billion, while falling short of expectations of $5.71 billion.
In response to current market conditions, AB InBev has narrowed its EBITDA growth guidance for 2024 to a range of 6% to 8%, a revision from the previous 4% to 8%. The company anticipates net capital expenditures to fall between $4 billion and $4.5 billion. RBC Capital Markets expressed confidence in AB InBev’s operational capabilities, suggesting that the company’s performance is poised for considerable improvement due to its strong market positions.
Furthermore, over the next12 months, ABI plans to return capital to shareholders through a $2 billion share buyback program..