The world’s largest brewer AB InBev (ABI) grew revenues by 4.5% in the third quarter driven by strong growth in its global beer brands as overall volumes edged up just 0.2%.
Total revenues grew by 4.5% in the quarter to US$14.7bn, with revenue per hl growth of 4.2%. On a constant geographic basis, revenue per hl grew by 4.4%, driven by revenue management initiatives and continued strong premium brand performances.
In the nine months so far in 2018, revenues have grown by by 4.6% with revenue per hl growth of 4.3%. On a constant geographic basis, revenue per hl grew by 4.6%.
The sales growth was primarily driven by price as volumes grew 0.2% in the quarter. Own beer volumes grew by 0.5% and non-beer volumes were down by 2.4% as good growth in own beer volumes achieved in Europe, Mexico and many African markets was partially offset by Brazil and Argentina.
Combined revenues its our global brands – Budweiser, Stella Artois and Corona - were up 7.7% globally and 10.6% outside of their home markets.
Cost of Sales increased by 6.3% in the third quarter and by 5.9% on a per hl basis, driven primarily by an increase in year-over-year commodity prices
However, EBITDA grew by 7.5% in the quarter with margin expansion of 116 bps to 40.3% as a result of top-line growth and aided by synergies and cost savings.
Normalized profit attributable to equity holders of AB InBev was US$1.6bn in the quarter compared to US$2.6bn in the same period last year as it was negatively impacted by mark-to-market losses linked to the hedging of its share-based payment programs.
Excluding the impact of these mark-to-market losses, normalized profit attributable to equity holders was down to US$2.2bn from US$ 2.3bn.
The group said that, recognizing volatility in some of our key markets, it expects to deliver “strong” revenue and EBITDA growth in the current financial year driven by the solid performance of its brand portfolio and strong commercial plans.
“Our growth model is now far more focused on category development, and as a consequence, we expect to deliver revenue per hl growth ahead of inflation based on premiumization and revenue management initiatives, while keeping costs below inflation,” the group stated
“We remain confident that growth will accelerate in the balance of the year.”
Magners cider owner C&C Group (CCR) has reported an almost tripling of its first half sales after its acquisition of Matthew Clark and Bibendum from stricken Conviviality.
Total revenues in the six months to 31 August were up 186% to €838.7m, representing overall organic growth of 6.4%.
Core earnings excluding the wholesale division acquisition were up 4.0% in the half.
Total operating profits were up 6.4% to €58.4m, including a €6.1m contribution from Matthew Clarke and Bibendum. This represented 4% growth on an organic basis.
Adjusted EBITDA was up 2.6% on an organic basis to €66.2m.
C&C Group CEO Stephen Glancey said trading through the first six months has been “strong” driven by favourable summer weather and the impact of the World Cup.
“Encouragingly, our key brands have all delivered market share in their key markets and year on year revenue growth. In our core business, wholesale and WINE also performed well with +11% revenue growth, shipping 0.56 million cases of wine a 2% increase from last year,” he said.
In Ireland Long alcoholic drink were up 3%, benefitting from the good summer and the World Cup. This growth came in the off-trade (+8%), with on-trade volumes remaining subdued at -2%. Cider increased its share of LAD to 13.8%
In Great Britain LAD markets volumes were up 3% for GB beer and 6% for GB cider and value ahead by 4% and 7%, respectively.
Net revenues declined at Matthew Clark/Bibendum from €529.5m to €467.4m.
The group said the performance of the division in the 5 months to 31 August 2018, was severely impacted by the business disruption linked to Conviviality Group’s collapse.
Having been heavily disrupted in April and May, Matthew Clark Wholesale recovered to generate EBIT of €6.8m for the period Bibendum was loss-making in the 5 month period, and we expect performance to stabilise in the second half.
Glancey added that since the acquisition of Matthew Clark and Bibendum “our absolute focus has been the stabilisation of the businesses”.
By the end of September the group settled £129m of monies owed to suppliers, paid taxes owed of £31m and collected £146m of monies due from customers.
“Looking ahead, we have a degree of momentum in our core business and recognise the criticality of Christmas trading for Mathew Clark and Bibendum. We’re very pleased with the way this business is responding following a very difficult trading period earlier in the year, with operational KPIs now trending satisfactorily in the circumstances. That said, it will only be once the business has proven itself through the important Christmas trading cycle that we can be confident that it has been restored to health.
“C&C’s core business is in good health with a strong balance sheet and a focus on shareholder value. Management are confident in the medium term that Matthew Clark and Bibendum will each unlock significant value and opportunity for all shareholders.”
Elsewhere, food and nutrition group Kerry Group (KYGA) has announced two further acqusitions – Fleischmann’s Vinegar Company and AATCO Food Industries.
Fleischmann’s Vinegar Company is headquartered in California and is an all-natural producer of specialty ingredients that further support Kerry’s taste and clean label strategies across a number of markets.
AATCO Food Industries is a leading provider of culinary sauces to the foodservice channel, headquartered in Muscat, Oman with manufacturing facilities in Sohar, Oman, Jeddah, Saudi Arabia and Nashik, India.
Kerry said these acquisitions further expand the group’s “foundational technology portfolio, as well as strengthening its foodservice and developing markets positioning, in line with its strategic growth priorities”.
Total consideration for the acquisitions is expected to be €365m. These acquisitions have annualised revenues of approximately €150m. The Group will finance the acquisitions from existing lines of credit and it is anticipated that the transactions will be completed prior to year-end, subject to routine regulatory and closing conditions.
On the markets this morning, the FTSE 100 has slumped a further 0.5% to 6,931.9pts as global stocks fell over night.
C&C Group has fallen 3.4% on this morning’s update back to €3.30. AB InBev has slumped 7.9% to €66.62.
Yesterday in the City
The FTSE 100 continued its long-running slump, falling a further 0.1% to 6,963pts yesterday, however a number of key stocks were helped by the falling pound, which fell to its lowest level in almost two months.
Other risers included Ocado (OCDO), bouncing back from a poor Tuesday after rising 3.7% to 801.2p.
Also on the up was Majestic Wine (WINE), up 3% to 396.5p, C&C Group ahead of this morning’s half year results, up 2.6% to €3.42, FeverTree (FEVR), up 2.3% to 2,737p and Cranswick (CWK), up 2.2% to 2,918p.
Fallers included McBride (MCB), down 3.6% to 135p after its half year results disappointed yesterday, PayPoint (PAY) down 3.2% to 821p, Greencore (GNC), down 1.6% to 186.1p and Nichols (NICL), down 1.5% to 1,335p.