Anheuser-Busch InBev (BUD 0.71%) announced fourth-quarter 2017 results on Thursday, detailing accelerated organic growth and incremental cost synergies from its megamerger with SABMiller just over a year ago.
With shares up more than 3% as the market digested the news, let's take a closer look at what AB InBev accomplished over the past few months, as well as what we can expect from the brewing titan in the coming quarters.
Image source: AB Inbev.
Anheuser-Busch InBev results: The raw numbers
| Metric |
Q4 2017 |
Q4 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$14.600 billion |
$14.202 billion |
2.8% |
|
Normalized profit (attributable to shareholders of AB InBev) |
$2.054 billion |
$919 million |
99.8% |
|
Normalized earnings per share |
$1.04 |
$0.43 |
141.9% |
Data source: AB InBev.
What happened with Anheuser-Busch InBev this quarter?
- AB InBev doesn't provide specific revenue or earnings guidance. So, for perspective -- and while we don't usually pay close attention to Wall Street's expectations -- consensus estimates predicted lower earnings of $0.98 per share on revenue of $14.5 billion.
- Organic revenue growth accelerated to 8.2%, up from 3.6% last quarter.
- Revenue per hectoliter grew 6.7% at constant currency, driven by premiumization and revenue-management initiatives.
- EBITDA increased 17.9% to $6.189 million, driven by revenue growth and synergies from the SABMiller merger.
- Total volume grew 1.6%, including 2.3% growth in own-beer volume and a 3.6% decline in non-beer volume.
- Revenue from AB InBev's three Global Brands -- Budweiser, Stella Artois, and Corona -- grew 17.8%, including 29% growth outside of their respective home markets.
- Budweiser remains the world's most valuable beer brand, according to BrandZ, growing global revenue 4.1% this year.
- Stella Artois delivered 12.8% revenue growth, thanks to growth in North America, repatriation in Australia, and its entry into new markets, including South Africa.
- Corona revenue increased 19.9% this year, driven by gains in Mexico, China, Australia, and Argentina.
- The United States remains a crowded market, and AB InBev admits it "has work to do" in balancing market share with profitability.
- Business in Brazil rebounded nicely throughout the year after weakness that had persisted since late 2016, ending with its strongest results this quarter. Revenue in the country grew 13.3% in the fourth quarter, including revenue per hectoliter growth of 10.1%.
- AB InBev captured $381 million of additional merger synergies in the fourth quarter, bringing its total fiscal 2017 synergies and cost savings to $1.304 billion.
What management had to say
In a prepared statement, AB InBev management called 2017 a "transformative year" and the company's best performance in three years, driven by its enviable portfolio of over 500 brands -- including seven of the world's top 10 most valuable beer brands -- which has been "reshaped ... to capture future growth."
Furthermore, the fruits of the SABMiller merger have exceeded expectations, with greater-than-expected cost and revenue synergies arriving at a faster-than-anticipated pace.
"As the world's leading brewer, we take responsibility for the health and growth of the global beer category," AB InBev added. "We are using our industry-leading analytics, insights, and brands to understand and address the evolving needs of consumers around the world."
Looking forward
Despite ongoing volatility in some key markets, AB InBev expects continued revenue and EBITDA growth in fiscal 2018 to be driven by premiumization and revenue management initiatives -- particularly as it shifts its focus to category development. As such, AB InBev expects it will achieve growth in net revenue per hectoliter above inflation for the year, while keeping cost increases below inflation.
In the meantime, the company expects a "softer" first quarter as it laps a difficult comparison to the same year-ago period, and as it transitions to new sales and marketing initiatives.
In addition, AB InBev reiterated its goal for capturing a total of $3.2 billion in merger synergies and cost savings. As of the end of 2017, it had already delivered $2.133 billion of that total, and it expects to capture the remainder over the next two to three years.
All things considered, there was little not to like about AB InBev's strong end to the year. And its outlook offers plenty of reasons for investors to remain optimistic for its future, as the company operates from a position of global strength.
