Struggles in Brazil Hurt AB InBev’s Q3 Financials

28 Oct 2016 --- Tough economic conditions in Brazil led to fall in Q3 profits at Anheuser-Busch InBev (AB InBev) , which unveiled its first set of results since its acquired SABMiller for $103bn. Profits at AB InBev fell by two percent to $4.03bn in the third quarter while revenues were up 2.8 percent to $11.4bn.

Brazil, which is AB InBev second biggest market, endured a tough quarter, with beer volumes down 4.1 percent, as the Corona and Budweiser maker was impacted by the economic conditions in the country which are hurting consumer's income. It was also hurt by tough comparables to the previous year in Brazil.

“Most of our markets delivered solid results. However, these results were negatively impacted by a very weak quarter in Brazil,” finance director Felipe Dutra said during a conference call.

In North America, beer volumes were down 2.4 percent, with Bud Light remaining under pressure but Michelob Ultra performing well.

Volumes were up 9.6 percent in Mexico, helped by marketing initiatives while in its other key market of China volume sales were ahead of the overall beer market.

The results did not factor in SABMiller’s finances into its overall results, but they did offer an update on how the SABMiller business was performing. 

In SABMiller's biggest two markets, Latin America and Africa, lager volumes were down one percent and three percent respectively in the quarter.

In Latin America, it was impacted  by a transport strike in Colombia while weak macro-economic conditions in many markets undermined its performance in Africa.

Last month, AB InBev won shareholder approval for its takeover of SABMiller, creating a giant which will capture an estimated 46 percent of global beer profits.