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AB InBev (BUD) Q4 Earnings Surpass Estimates, Revenues Miss
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported better-than-anticipated earnings in fourth-quarter 2022, surpassing the Zacks Consensus and our estimate. Meanwhile, sales missed the Zacks Consensus Estimate and our estimate. Earnings and sales improved year over year.
Top and bottom-line growth reflected continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Results also benefited from continued consumer demand for its brand portfolio. Backed by the continued business momentum, the company outlined its view for 2023.
Shares of the Zacks Rank #2 (Buy) company have gained 3.6% in the past year against the industry’s decline of 3.7%.
Image Source: Zacks Investment Research
Q4 Highlights
AB InBev reported normalized earnings per share (EPS) of 98 cents, which rose 8.9% from 90 cents in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate and our estimate of 72 cents.
Underlying EPS (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs, and the impacts of hyperinflation) was 86 cents in fourth-quarter 2022, up 16.2% from 74 cents earned in the year-ago quarter.
Revenues of $14,668 million improved 3.3% from the year-ago quarter. However, revenues missed the Zacks Consensus Estimate of $15,191 million and our estimate of $15,179 million. The company registered organic revenue growth of 10.2%, primarily driven by robust revenue per hectoliter (hl) growth. The top line benefited from strong consumer demand for its portfolio, consistent execution of its strategy and strength of the beer category globally. Accelerated digital transformation also contributed to top-line growth in the quarter.
Revenues reflected strong performances of its three global brands — Budweiser, Corona and Stella Artois — which advanced 6.6% outside their home markets in the fourth quarter.
Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise
Revenues per hl were up 11.2% on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across key markets and premiumization efforts. The total organic volume dipped 0.6%, with a 0.9% decline in the own-beer volume and 1.9% growth in the non-beer volume.
AB InBev remains keen on making the most of investments in its portfolio over the years, as well as rapidly growing its digital platform, including BEES and Zé Delivery. The company’s digital transformation initiatives have been on track, with B2B digital platforms generating about 63% of its revenues at the end of the fourth quarter. The company noted that the monthly active user base of BEES reached 3.1 million users as of Dec 31, 2022. The company’s direct-to-consumer ecosystem generated more than $450 million in revenues and approximately 69 million e-commerce orders in 2022.
The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed more than $1.6 billion to the total revenues in 2022.
The cost of sales increased 9.3% on a reported basis and 16.6% on an organic basis to $6,661 million in the fourth quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,947 million, which rose 1.3% year over year and 7.6% on an organic basis. However, the normalized EBITDA margin contracted 70 basis points (bps) to 33.7% and declined 80 bps organically.
SG&A expenses declined 0.7% year over year to $4,592 million and increased 6.8% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.
Outlook
For 2023, AB InBev expects EBITDA growth of 4.8%, in line with its medium-term outlook. It anticipates revenue growth to be higher than EBITDA growth, driven by strong volume and pricing.
The company expects net pension interest expenses and accretion expenses of $200-$230 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2023.
Management anticipates a normalized effective tax rate of 27-29% for 2023. Net capital expenditure is projected to be $4.5-$5 billion for 2023, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.
Other Stocks to Consider
We highlighted some other top-ranked stocks from the broader Consumer Staples space, namely Coca-Cola FEMSA (KOF - Free Report) , The Coca-Cola Company (KO - Free Report) and Brown-Forman (BF.B - Free Report) .
Coca-Cola FEMSA currently sports a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 36.5%, on average. It has a long-term earnings growth rate of 12%. The company has rallied 33.4% in the past year.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year earnings per share suggests growth of 64.2% from the year-ago quarter’s reported figure.
Coca-Cola currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 6.7%. KO has a trailing four-quarter earnings surprise of 5.7%, on average. The company has declined 5.7% in the past year.
The Zacks Consensus Estimate for Coca-Cola’s current financial-year sales suggests growth of 2.9%, while earnings indicate flat results compared with the year-ago reported number. The consensus mark for KO’s earnings per share has moved up 3.2% in the past 30 days.
Brown-Forman currently has a Zacks Rank of 2. BF.B has a trailing four-quarter earnings surprise of 8.9%, on average. The company has declined 7.4% in the past year.
The Zacks Consensus Estimate for Brown-Forman’s current financial-year sales and earnings suggests declines of 1.8% and 13%, respectively, from the prior-year reported numbers. The consensus mark for BF.B’s earnings per share has been unchanged in the past 30 days.
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AB InBev (BUD) Q4 Earnings Surpass Estimates, Revenues Miss
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported better-than-anticipated earnings in fourth-quarter 2022, surpassing the Zacks Consensus and our estimate. Meanwhile, sales missed the Zacks Consensus Estimate and our estimate. Earnings and sales improved year over year.
Top and bottom-line growth reflected continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Results also benefited from continued consumer demand for its brand portfolio. Backed by the continued business momentum, the company outlined its view for 2023.
Shares of the Zacks Rank #2 (Buy) company have gained 3.6% in the past year against the industry’s decline of 3.7%.
Image Source: Zacks Investment Research
Q4 Highlights
AB InBev reported normalized earnings per share (EPS) of 98 cents, which rose 8.9% from 90 cents in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate and our estimate of 72 cents.
Underlying EPS (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs, and the impacts of hyperinflation) was 86 cents in fourth-quarter 2022, up 16.2% from 74 cents earned in the year-ago quarter.
Revenues of $14,668 million improved 3.3% from the year-ago quarter. However, revenues missed the Zacks Consensus Estimate of $15,191 million and our estimate of $15,179 million. The company registered organic revenue growth of 10.2%, primarily driven by robust revenue per hectoliter (hl) growth. The top line benefited from strong consumer demand for its portfolio, consistent execution of its strategy and strength of the beer category globally. Accelerated digital transformation also contributed to top-line growth in the quarter.
Revenues reflected strong performances of its three global brands — Budweiser, Corona and Stella Artois — which advanced 6.6% outside their home markets in the fourth quarter.
Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise
Anheuser-Busch InBev SA/NV price-consensus-eps-surprise-chart | Anheuser-Busch InBev SA/NV Quote
Revenues per hl were up 11.2% on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across key markets and premiumization efforts. The total organic volume dipped 0.6%, with a 0.9% decline in the own-beer volume and 1.9% growth in the non-beer volume.
AB InBev remains keen on making the most of investments in its portfolio over the years, as well as rapidly growing its digital platform, including BEES and Zé Delivery. The company’s digital transformation initiatives have been on track, with B2B digital platforms generating about 63% of its revenues at the end of the fourth quarter. The company noted that the monthly active user base of BEES reached 3.1 million users as of Dec 31, 2022. The company’s direct-to-consumer ecosystem generated more than $450 million in revenues and approximately 69 million e-commerce orders in 2022.
The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed more than $1.6 billion to the total revenues in 2022.
The cost of sales increased 9.3% on a reported basis and 16.6% on an organic basis to $6,661 million in the fourth quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,947 million, which rose 1.3% year over year and 7.6% on an organic basis. However, the normalized EBITDA margin contracted 70 basis points (bps) to 33.7% and declined 80 bps organically.
SG&A expenses declined 0.7% year over year to $4,592 million and increased 6.8% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.
Outlook
For 2023, AB InBev expects EBITDA growth of 4.8%, in line with its medium-term outlook. It anticipates revenue growth to be higher than EBITDA growth, driven by strong volume and pricing.
The company expects net pension interest expenses and accretion expenses of $200-$230 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2023.
Management anticipates a normalized effective tax rate of 27-29% for 2023. Net capital expenditure is projected to be $4.5-$5 billion for 2023, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.
Other Stocks to Consider
We highlighted some other top-ranked stocks from the broader Consumer Staples space, namely Coca-Cola FEMSA (KOF - Free Report) , The Coca-Cola Company (KO - Free Report) and Brown-Forman (BF.B - Free Report) .
Coca-Cola FEMSA currently sports a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 36.5%, on average. It has a long-term earnings growth rate of 12%. The company has rallied 33.4% in the past year.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year earnings per share suggests growth of 64.2% from the year-ago quarter’s reported figure.
Coca-Cola currently has a Zacks Rank #2 and an expected long-term earnings growth rate of 6.7%. KO has a trailing four-quarter earnings surprise of 5.7%, on average. The company has declined 5.7% in the past year.
The Zacks Consensus Estimate for Coca-Cola’s current financial-year sales suggests growth of 2.9%, while earnings indicate flat results compared with the year-ago reported number. The consensus mark for KO’s earnings per share has moved up 3.2% in the past 30 days.
Brown-Forman currently has a Zacks Rank of 2. BF.B has a trailing four-quarter earnings surprise of 8.9%, on average. The company has declined 7.4% in the past year.
The Zacks Consensus Estimate for Brown-Forman’s current financial-year sales and earnings suggests declines of 1.8% and 13%, respectively, from the prior-year reported numbers. The consensus mark for BF.B’s earnings per share has been unchanged in the past 30 days.