AB InBev Is Unhappy With Third-Quarter Results Despite Huge Growth In Profits

By Sam Lewis

Company says earnings were heightened by newly acquired brands and price increases

Halloween seems like the perfect party holiday for the brewer of Budweiser, Anheuser-Busch InBev (AB InBev), to release its third-quarter earnings report. The world’s largest brewer’s profits rose thanks to the company taking over new brands and selling at higher prices to offset a lower sales volume.

For the quarter, the Leuven, Belgium-based AB InBev says that net profit climbed 31 percent to $2.37 billion compared to 2012’s $1.18 billion. Revenue for the company also saw a significant increase, up 14 percent to $11.6 billion. AB InBev credits its gains largely to the $20 billion purchase of Mexico’s Grupo Modelo back in June. Including the recently purchased Modelo, sales volume increased 11 percent company wide. Take away the recent acquisition, and sales volume plummets 1.3 percent.

AB InBev’s flagship product, Budweiser, had the highest sales growth for the quarter. The company’s lead product saw global sales climb more than 8 percent in that time frame. Corona also saw significant growth, boasting sales gains of almost 4 percent worldwide. Other brands under the AB InBev umbrella include Beck’s, Stella Artois, and Brazil’s Brahma. Despite growth among the company’s top products, executives are not thrilled with the company’s sales. “We are not satisfied with our top line performance in 2013, which continues to be impacted by macroeconomic headwinds (fluctuating currencies, tough economic climates, even a lawsuit) in a number of our markets,” says AB InBev’s third-quarter earnings report.

But it’s not all doom and gloom at AB InBev. Incorporating Modelo into the mix of the company’s products is going much faster than it anticipated. The brewer is already reaping projected savings of $250 million through the acquisition. Prior to the purchase, AB InBev only owned about half of Modelo. With Brazil hosting the 2014 World Cup, Felipe Dutra, AB InBev’s CFO, is anticipating a banner summer for the company. AB InBev’s biggest brands will have ample exposure on one of the world’s largest stages, thrusting them into some of the lesser-known markets.