Morning update

The world’s largest brewer AB InBev grew revenues by more than 15% last year with volume growth, pricing and premiumisation driving growth, though mounting costs constrained profit growth.

The brewer grew top-line revenues by 15.6% in 2021 to $54.3bn, comprised of 9.6% volume growth and 5.5% revenue per hl growth.

Revenue growth dipped to 12.1% in the fourth quarter, with a notable uptick in revenue per hl growth at 8.1% as costs mounted.

In the fourth quarter volume growth fell to 3.6%, compared to 9.6% for the full year, with own beer volumes up by 3.4% and non-beer volumes up by 3.8%.

Performance was driven by a 23.5% increase in combined revenues of its core global brands, Budweiser, Stella Artois and Corona, outside of their respective home markets in the fourth quarter, and 22.9% in the full year.

In Europe, top-line annual recovered to pre-pandemic levels. Compared to 2020, revenue grew by low-teens with mid-single digit volume and revenue per hl growth.

The US saw more modest revenue growth of 3.4% as sales to retailers declined by 2.3%, estimated to be below the industry, while sales to wholesalers were flattish as inventories normalized following pandemic related volatility.

Overall innovations contributed more than $5bn, making up approximately 10% of total revenues, while non-alcoholic beer portfolio delivered double-digit revenue growth driven by global brand extensions such as Budweiser Zero and Stella 0.0.

On the bottom line, EBITDA grew by 11.8% for the full year, at the top-end of our 2021 outlook, as topline growth was partially offset by anticipated transactional FX and commodity headwinds, higher costs due primarily to “higher variable compensation accruals” and elevated supply chain costs.

That represented a margin contracted of 118bps for the year back to 35.4%.

AB InBev said it expects EBITDA to continue to grow in-line with its medium term outlook of between 4-8% and revenues to grow ahead of EBITDA from a combination of volume and price – albeit the outlook is subject to Covid uncertainties.

CEO Michel Doukeris commented: “This year was an important step in our journey to create a future with more cheers. Relentless execution of our strategy drove continued momentum to deliver over 15% top-line growth, EBITDA at the top-end of our outlook and another year of strong cash flow generation.”

AB InBev shares are down 0.4% to €54.93 on the news, which is well above the wider market given the widespread stock falls this morning.

Morning update

Global stocks have crashed this morning on the news that Russian forces have launched an invasion of Ukraine.

The FTSE 100 is down 2.7% to 7,301pts on the news – though this is only as low as the market fell in January on a tech sell-off.

Coca-Cola HBC, which sellers Coca-Cola products into Ukraine and Russia, is down 4% to 2,071p.

But even heavier fallers include McColl’s, down another 8.7% to 6.5p, THG, down 7.9% to 88.6p, Virgin Wines, down 7.3% to 140p and Bakkavor, down 4% to 119.6p.

The few risers include Science in Sport, up 2.5% to 61p, Glanbia, up 1.9% to €13.24 and Premier Foods, up 0.2% to 113.2p.

A number of companies with operations in Ukraine have made media comments about the situation this morning.

A Nestle spokesperson said: “We are closely monitoring the situation and have business continuity plans in place that can be activated as needed. The safety and protection of our employees remains our highest priority. We will not speculate on any potential sanctions.”

Coca-Cola HBC CEO Zoran Bogdanovic told Reuters: ““We have contingencies in place for all scenarios, including alternative sourcing, so that we can act swiftly to whatever happens.”

“We ensure that we have the right level of stocks in our markets to avoid disruptions.”

A Danone spokesperson is quoted as saying: “Danone is monitoring the situation. Our local teams are monitoring the situation very closely with a view to ensure the security of employees.”

Yesterday in the City

The FTSE 100 ended yesterday flat, edging up four points to 7,498.2pts before this morning’s crash.

Online companies were amongst the major fallers, with THG dropping 5.3% to 96.2p, Just Eat Takeaway,com, down 5.1% to 2,657.5p, Deliveroo, down 3% to 124.2p and Naked Wines, down 2.6% to 395.5p.

Other fallers included the volatile McColl’s, down 5.9% back to 7.2p, Marks & Spencer, down 2.4% to 169.2p, Pets at Home, down 2.4% to 364.4p, PayPoint, down 2.4% to 608p and B&M European Value Retail, down 1.1% to 578p.

The day’s risers included Glanbia, up 5% to €12.99, Hotel Chocolat, up 3.6% to 404p, Bakkavor, up 3% to 124.6p, Ocado, up 2% to 1,326p, Unilever, up 1.3% to 3,844p and Tesco, up 1.1% to 290.9p.

Danone, which yesterday said it registered a strong end to its financial year as a recovery in bottled water and higher prices pushed up sales, was up 3.9% to €56.69.