Anheuser-Busch InBev, the multinational brewing company, experienced a surge in its stock early Thursday following the release of impressive second-quarter earnings results. Despite being impacted by a conservative-led boycott of Bud Light in North America, the company managed to beat earnings estimates.
Stock Performance and Bond Buying
AB InBev’s stock, represented by ticker symbol BUD, rose by more than 2% after the announcement. This positive movement also prompted increased buying activity in the company’s bonds. Data from BondCliQ Media Services indicates that the most-active bonds, particularly the 5.55% notes maturing in 2049, witnessed concentrated buying over the past ten days.
Strong Second-Quarter Results
AB InBev reported adjusted per-share earnings of 72 cents for the second quarter, surpassing expectations. The FactSet consensus had predicted 68 cents per share. The company’s revenue increased from $14.793 billion to $15.12 billion; however, it fell slightly short of the consensus estimate of $15.376 billion.
Impact on U.S. Sales and Overall Volumes
As anticipated, sales to U.S. retailers declined by 14%, underperforming the industry as a whole. The boycott of Bud Light, triggered by a marketing campaign involving a transgender influencer, negatively affected Bud Light volumes. Overall, volumes decreased by 1.4%, aligning with market expectations.
Factors Contributing to Profit Decline
While Bud Light faced pressure from the boycott, it was not the primary driver behind the overall drop in profit. Market-share performance accounted for two-thirds of the profit decline, with the remaining portion attributed to factors such as productivity loss, increased sales and marketing investments, and support measures for wholesalers. A significant factor impacting profit was derivatives, as the company recorded a mark-to-market loss of $1.08 billion on hedges for its share-based payment programs and shares issued in relation to the combination with Grupo Modelo and SAB.
Industry Peers and Conclusion
In related news, Molson Coors, a competitor, experienced a decline in stock prices after falling short of sales estimates, despite gaining market share from Bud Light’s setbacks. Meanwhile, Boston Beer’s stock rallied as Twisted Tea compensated for stagnant seltzer demand in the second quarter.
Overall, Anheuser-Busch InBev displayed resilience by surpassing earnings estimates despite the challenges faced in North America. The company remains determined to address market performance and other factors affecting profitability while capitalizing on opportunities within the industry.
