Anheuser Busch Inbev Falls On Earnings Miss, Coronavirus Impact

Shares of Budweiser's parent company Anheuser Busch Inbev BUD dropped 9% Thursday morning after the company's earnings report fell short of expectations.

What Happened

Ab InBev's net income for the fourth quarter fell from $456 million in the same quarter last year to $114 million on a 1.3% decline in revenue to $13.33 billion. Organic volume grew 1.6% in the quarter but at the same time input costs rose 4.1%.

Revenue growth per hectoliter slowed from 3.1% in the prior quarter to 0.9%.

Why It's Important

Budweiser and Bud Light sales continued to shed market share in the U.S. market. By management's own admission, rival beer brands have done a better job of taking advantage of the shift away from beer to hard seltzers.

On the other hand, Ab InBev's Michelob Ultra brand continued to sell well in the quarter and now trails Bud Light to hold the country's number two ranked beer by retail sales, according to The Wall Street Journal.

Ab InBev guided its EBITDA to grow 2% to 5% for 2020, which is shy of the 5.7% estimate. The company noted the coronavirus already impacted sales by $285 million in January and February.

'The impact of the COVID-19 virus outbreak on our business continues to evolve," the company said. "The outbreak has led to a significant decline in demand in China in both on-premise and in-home channels. Additionally, demand during the Chinese New Year was lower than in previous years as it coincided with the beginning of this outbreak. For the first two months of 2020, we estimate that the outbreak has resulted in lost revenue of approximately 285 million USD and lost EBITDA of approximately 170 million USD in China."

Anheuser Busch Inbev shares traded down 9.25% to $60.16 at time of publication.

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