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AB InBev (BUD) Tops on Q2 Earnings & Revenues on Robust Demand
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported solid results in second-quarter 2024. The company’s revenues and earnings beat the Zacks Consensus Estimate and improved year over year. Top and bottom-line growth reflected a positive business momentum, owing to the strength of its diversified footprint and consumer demand for its megabrands. The company outlined its view for 2024.
AB InBev reported an 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) of 90 cents in second-quarter 2024, up 25% from the 72 cents earned in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 84 cents. Underlying EPS growth was driven by double-digit organic EBITDA growth and continued optimization of its business.
Revenues of $15.3 billion increased 1.4% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $15.2 billion. The company registered organic revenue growth of 2.7%, primarily driven by robust revenue per hectoliter (hl) growth and revenue growth in 65% of its markets. Revenues benefited from pricing actions, continued premiumization and other revenue-management initiatives. Accelerated digital transformation also contributed to top-line growth in the quarter.
Shares of the Zacks Rank #3 (Hold) company have gained 7.5% in the past year against the industry’s decline of 19.7%.
Image Source: Zacks Investment Research
Q2 Details
Revenue per hl improved 3.6% year over year on an organic basis, backed by revenue-management initiatives. However, the company’s total organic volume dipped 0.8% as the declines in the China and Argentina regions were partly offset by growth in the Middle Americas, South America, Africa, and Europe. The total organic volume included a 1.3% decline in the own-beer volume, offset by 3.4% growth in the non-beer volume.
Revenues reflected strong performances of its megabrands — Budweiser, Corona, Stella Artois, Corona and Michelob Ultra — which collectively advanced 3.3% year over year outside their home markets in the second quarter. This growth was led by a 5.6% rise in Corona outside of its home markets.
AB InBev has been 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 contributing about 70% to its revenues in the second quarter. The company noted that the monthly active user base of BEES reached 3.8 million users in second-quarter 2024. Its omni-channel, direct-to-consumer ecosystem of digital and physical products generated $400 million in revenues in the reported quarter.
Anheuser-Busch InBev SA/NV Price, Consensus and EPS Surprise
BUD has been focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed $375 million to the total revenues in the second quarter.
The cost of sales declined 3.6% on a reported basis and 2.2% on an organic basis to $6.8 billion in the second quarter. SG&A expenses rose 2.3% year over year on both reported and organic basis to $4.8 billion.
Our model had predicted the cost of sales to decrease 1.1% for the second quarter, with a decline of 120 basis points (bps) in the cost-of-sales rate to 45.2%. The SG&A expense rate was anticipated to decline 50 bps to 30.6%. In dollar terms, SG&A expenses were expected to be flat year over year for the second quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $5.3 billion, which improved 8% year over year on a reported basis and 10.2% on an organic basis. The normalized EBITDA margin expanded 210 bps year over year on a reported basis and 236 bps organically to 34.6%. The organic EBITDA margin benefited from cost efficiencies and disciplined overhead management.
We anticipated the normalized EBITDA to increase 7.5% year over year to $5.28 billion. Meanwhile, the normalized EBITDA margin was expected to expand 180 bps to 34.3% in the second quarter.
Outlook
For 2024, AB InBev expects year-over-year EBITDA growth of 4-8%, in line with its medium-term outlook. The company expects net pension interest expenses and accretion expenses of $220-$250 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2024.
Management expects a normalized effective tax rate of 27-29% for 2024. Net capital expenditure is projected to be $4-$4.5 billion for 2024, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Vital Farms (VITL - Free Report) , The Chef's Warehouse (CHEF - Free Report) and The Coca-Cola Company (KO - Free Report) .
Vital Farms offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter earnings surprise of 102.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate Vital Farms’ current financial-year sales and EPS indicates growth of 24.9% and 66.1%, respectively, from the year-ago reported numbers. The consensus mark for VITL’s EPS has moved up 2.1% in the past 30 days.
Chef's Warehouse, a distributor of specialty food products in the United States, presently has a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 33.7%, on average.
The Zacks Consensus Estimate for CHEF’s current financial year’s sales and earnings indicates growth of 9.5% and 7.9%, respectively, from the prior-year reported numbers. The consensus mark for CHEF’s EPS has been unchanged in the past 30 days.
Coca-Cola, a leading beverage company, currently carries a Zacks Rank #2. KO has a trailing four-quarter earnings surprise of 4.7%, on average.
The Zacks Consensus Estimate for Coca-Cola’s current financial year’s sales and EPS indicates growth of 0.5% and 5.6%, respectively, from the year-ago reported numbers. The consensus mark for KO’s EPS has moved up 0.7% in the past 30 days.
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AB InBev (BUD) Tops on Q2 Earnings & Revenues on Robust Demand
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported solid results in second-quarter 2024. The company’s revenues and earnings beat the Zacks Consensus Estimate and improved year over year. Top and bottom-line growth reflected a positive business momentum, owing to the strength of its diversified footprint and consumer demand for its megabrands. The company outlined its view for 2024.
AB InBev reported an 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) of 90 cents in second-quarter 2024, up 25% from the 72 cents earned in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of 84 cents. Underlying EPS growth was driven by double-digit organic EBITDA growth and continued optimization of its business.
Revenues of $15.3 billion increased 1.4% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $15.2 billion. The company registered organic revenue growth of 2.7%, primarily driven by robust revenue per hectoliter (hl) growth and revenue growth in 65% of its markets. Revenues benefited from pricing actions, continued premiumization and other revenue-management initiatives. Accelerated digital transformation also contributed to top-line growth in the quarter.
Shares of the Zacks Rank #3 (Hold) company have gained 7.5% in the past year against the industry’s decline of 19.7%.
Image Source: Zacks Investment Research
Q2 Details
Revenue per hl improved 3.6% year over year on an organic basis, backed by revenue-management initiatives. However, the company’s total organic volume dipped 0.8% as the declines in the China and Argentina regions were partly offset by growth in the Middle Americas, South America, Africa, and Europe. The total organic volume included a 1.3% decline in the own-beer volume, offset by 3.4% growth in the non-beer volume.
Revenues reflected strong performances of its megabrands — Budweiser, Corona, Stella Artois, Corona and Michelob Ultra — which collectively advanced 3.3% year over year outside their home markets in the second quarter. This growth was led by a 5.6% rise in Corona outside of its home markets.
AB InBev has been 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 contributing about 70% to its revenues in the second quarter. The company noted that the monthly active user base of BEES reached 3.8 million users in second-quarter 2024. Its omni-channel, direct-to-consumer ecosystem of digital and physical products generated $400 million in revenues in the reported 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
BUD has been focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed $375 million to the total revenues in the second quarter.
The cost of sales declined 3.6% on a reported basis and 2.2% on an organic basis to $6.8 billion in the second quarter. SG&A expenses rose 2.3% year over year on both reported and organic basis to $4.8 billion.
Our model had predicted the cost of sales to decrease 1.1% for the second quarter, with a decline of 120 basis points (bps) in the cost-of-sales rate to 45.2%. The SG&A expense rate was anticipated to decline 50 bps to 30.6%. In dollar terms, SG&A expenses were expected to be flat year over year for the second quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $5.3 billion, which improved 8% year over year on a reported basis and 10.2% on an organic basis. The normalized EBITDA margin expanded 210 bps year over year on a reported basis and 236 bps organically to 34.6%. The organic EBITDA margin benefited from cost efficiencies and disciplined overhead management.
We anticipated the normalized EBITDA to increase 7.5% year over year to $5.28 billion. Meanwhile, the normalized EBITDA margin was expected to expand 180 bps to 34.3% in the second quarter.
Outlook
For 2024, AB InBev expects year-over-year EBITDA growth of 4-8%, in line with its medium-term outlook. The company expects net pension interest expenses and accretion expenses of $220-$250 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2024.
Management expects a normalized effective tax rate of 27-29% for 2024. Net capital expenditure is projected to be $4-$4.5 billion for 2024, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Vital Farms (VITL - Free Report) , The Chef's Warehouse (CHEF - Free Report) and The Coca-Cola Company (KO - Free Report) .
Vital Farms offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter earnings surprise of 102.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate Vital Farms’ current financial-year sales and EPS indicates growth of 24.9% and 66.1%, respectively, from the year-ago reported numbers. The consensus mark for VITL’s EPS has moved up 2.1% in the past 30 days.
Chef's Warehouse, a distributor of specialty food products in the United States, presently has a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 33.7%, on average.
The Zacks Consensus Estimate for CHEF’s current financial year’s sales and earnings indicates growth of 9.5% and 7.9%, respectively, from the prior-year reported numbers. The consensus mark for CHEF’s EPS has been unchanged in the past 30 days.
Coca-Cola, a leading beverage company, currently carries a Zacks Rank #2. KO has a trailing four-quarter earnings surprise of 4.7%, on average.
The Zacks Consensus Estimate for Coca-Cola’s current financial year’s sales and EPS indicates growth of 0.5% and 5.6%, respectively, from the year-ago reported numbers. The consensus mark for KO’s EPS has moved up 0.7% in the past 30 days.