AB InBev forecasts worst quarter in years on virus

LONDON: Anheuser-Busch InBev NV, the world’s largest brewer, has forecast the steepest decline in quarterly profit in at least five years due to the coronavirus.

First-quarter earnings will drop about 10% after fourth-quarter profit declined more than analysts estimated. AB InBev blamed the biggest jump in raw material costs in a decade for last year’s performance, and said it was a disappointment for the company.

The coronavirus will further dent the company’s business in China, where shipments had already started to slow at the end of last year.

In October, the company cut its forecast from strong earnings growth to moderate earnings growth, wiping out US$20bil in market value in a single day. If this year’s earnings come in at the lower end of the guidance of 2% to 5%, it would be the weakest growth in four years.

The Budweiser maker has reopened over half of its 33 breweries in China and has obtained licences from the government to restart the remainder of them other than its Wuhan facility.

Profit fell 5.5% on an adjusted basis before interest, taxes, depreciation and amortisation in the fourth quarter, the Leuven, Belgium-based brewer said Thursday.

Analysts expected a drop of 1.9%.

The disease outbreak wiped about US$170mil off AB InBev’s earnings in China in January and February and US$285mil of revenue.

AB InBev sold a stake in its Asia-Pacific unit Budweiser Brewing Co APAC in September to help reduce debt and to serve as a vehicle for mergers and acquisitions. — Bloomberg

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