Anheuser-Busch InBev Delivers Strong Third Quarter Results with Consumer Demand High
Anheuser-Busch InBev SA/NV BUD, also known as AB InBev, saw positive results in its third-quarter report for 2024. The company’s earnings surpassed the Zacks Consensus Estimate and improved compared to the same time last year. Growth in both revenue and earnings showcases the company’s strong business momentum driven by diverse offerings and robust consumer interest in its well-known brands.
Q3 Earnings Highlights
AB InBev reported an underlying EPS (normalized EPS, which excludes mark-to-market losses from share-based payment programs and hyperinflation effects) of 98 cents. This is a 14% increase from 86 cents in the same period last year and above the Zacks Consensus Estimate of 90 cents. The uptick in earnings is attributed to EBIT growth and efficient management of finance costs.
However, revenues of $15 billion fell short of expectations, missing the Zacks Consensus Estimate of $15.6 billion. The organic revenue growth was 2.1%, supported by the ongoing trend of premiumization and increased revenue per hectoliter (hl), with positive revenue growth in over 60% of AB InBev’s markets. In contrast, overall volumes dipped 2.4% due to challenges in consumer demand in China and Argentina, where volumes grew in only half of the markets.
In the past year, shares of BUD, which holds a Zacks Rank #3 (Hold), gained 7.5%, outperforming the industry that saw a decline of 19.7%.
Insights into Revenue Strategies
Revenue per hl increased by 4.6% year over year due to strategic revenue-management initiatives. The 3.1% decline in own-beer volume was counterbalanced by a 0.6% increase in non-beer volume.
Standout performance was recorded from AB InBev’s megabrands—Budweiser, Corona, Stella Artois, and Michelob Ultra—which collectively saw a 3.1% rise year over year outside their respective home markets. Notably, Corona’s growth surged by 10.2% in these markets.
AB InBev continues to invest in its diverse portfolio and rapidly expand its digital platforms, such as BEES and Zé Delivery. The company’s digital transformation efforts have been fruitful, with B2B platforms contributing approximately 72% to revenue in the third quarter. The active user base of BEES reached 3.9 million, while its combined digital and physical retail ecosystem generated $350 million in revenue.
Anheuser-Busch InBev SA/NV Performance Snapshot
BUD is also focusing on expanding its Beyond Beer portfolio, which significantly supports revenue growth. This segment alone contributed $365 million to total revenues in the third quarter.
Interestingly, the cost of sales decreased by 6.9% on a reported basis but increased by 2% on an organic basis, totaling $6.7 billion. Selling, general and administrative (SG&A) expenses rose by 2.2% year over year on a reported basis and 2.7% organically, reaching $4.5 billion.
The company’s normalized earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at $5.4 billion, remaining flat year over year on a reported basis while showing a 7.1% increase on an organic basis. The EBITDA margin improved by 170 bps on a reported basis and by 183 bps organically, reaching 55.6%, benefiting from cost efficiencies.
A share buyback program worth $2 billion has been approved by the board and will likely be executed over the next 12 months.
Outlook for 2024
Looking ahead, AB InBev anticipates EBITDA growth of 6-8% year over year for 2024. Net pension interest and accretion expenses are expected to be around $220-$250 million, subject to currency and interest rate fluctuations, with an average gross debt coupon expected to be 4%.
The management also predicts a normalized effective tax rate between 27-29% for 2024, alongside capital expenditures projected between $4 billion and $4.5 billion, aimed at increasing investments in innovation and consumer-focused initiatives.
Other Noteworthy Stocks
Freshpet, Inc. FRPT, specializing in pet food, boasts an average earnings surprise of 132.9% over the last four quarters, currently holding a Zacks Rank #1 (Strong Buy). Its consensus estimates point to a 23.4% growth in sales and a 193.3% increase in EPS this financial year compared to last.
Vital Farms VITL, known for pasture-raised products, also holds a Zacks Rank of 1, with growth projections for its current year sales and EPS at 31% and 40%, respectively, from the previous year. It maintains a four-quarter average earnings surprise of 82.5%.
Nomad Foods Ltd. NOMD, a frozen foods manufacturer, ranks #2 (Buy) with a trailing four-quarter average earnings surprise of 3.1%. Its sales and EPS are expected to grow by 4.9% and 25.5% year-over-year, respectively.
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