AB InBev records strong growth in Nigeria

Nigeria

The world’s largest brewer, Anheuser-Busch InBev, or AB InBev said it recorded growth in volume, revenue and market share growth achieved in many of our important markets including Nigeria.

It would be recalled that AB InBev acquired SAB Miller for over $100 billion in 2016, a merger that automatically added Nigeria’s Interfact Breweries to become the ‘third force’ in the alcoholic beverage sector where Heineken’s Nigeria Breweries and Diageo’s Guinness Nigeria are recording declining growth and revenue.

AB InBev said in the statement that the growth was also witnessed across its key markets led by Mexico, China, Western Europe, Colombia and several African countries.

The company said its growth in Nigeria accelerated throughout this past year following the introduction of our new brewery mid-year to meet demand, with revenue growth of more than 50% in 4Q18 (more than 25% in FY18) driven by double digit volume growth and continued market share gains. EBITDA margins expanded by more than 2 000 bps in 4Q18 as a result of the alleviation of capacity constraints and Budweiser’s entry into the premium segment.

Revenue grew by 4.8% in FY18 and by 5.3% in 4Q18, with revenue per hl growth of 4.5% in FY18 and 4.9% in 4Q18 driven by global premiumization and revenue management initiatives. On a constant geographic basis, revenue per hl grew by 4.7% in FY18 and by 4.6% in 4Q18.

Total volumes grew by 0.3% in FY18, with own beer volumes up 0.8% and non-beer volumes down 3.6%. In 4Q18, total volumes increased by 0.3%, with own beer volumes up 1.2% and non-beer volumes down 4.9%.
Global Brands: Combined revenues of our three global brands, Budweiser, Stella Artois and Corona, grew by 9.0% in FY18 and by 9.8% in 4Q18. Outside of their respective home markets, the global brands grew by 13.1% in FY18 and by 12.6% in 4Q18.

Cost of Sales increased by 4.7% in FY18 and by 4.3% on a per hl basis. On a constant geographic basis, CoS per hl increased by 4.6% in FY18. In 4Q18, CoS increased by 6.5% and by 6.0% on a per hl basis. On a constant geographic basis, CoS per hl increased by 6.0% in 4Q18.

The company said its EBITDA increased by 7.9% in FY18 to 22 080 million USD, as a result of top-line growth and enhanced by cost discipline and synergy capture. EBITDA margin expanded by 118 bps to 40.4%. In 4Q18, EBITDA increased by 10.0% to 6 166 million USD with margin expansion of 190 bps to 43.3%.

Net finance costs (excluding non-recurring net finance results) were 6 747 million USD in FY18 compared to 5 814 million USD in FY17. The increase was predominantly due to a mark-to-market loss of 1 774 million USD in FY18 linked to the hedging of our share-based payment programs, compared to a loss of 291 million USD in FY17, resulting in a swing of 1 483 million USD. In 4Q18, net finance costs were 2 144 million USD compared to 1 559 million USD in 4Q17.

Normalized effective tax rate (ETR) increased to 27.8% in FY18 from 22.9% in FY17 and increased to 32.9% in 4Q18 from 32.1% in 4Q17. Excluding the impact of losses relating to the hedging of our share-based payment programs, our normalized ETR was 24.0% in FY18 as compared to 22.4% in FY17 and 25.1% in 4Q18 as compared to 28.8% in 4Q17.

Normalized profit attributable to equity holders of AB InBev was 6 793 million USD in FY18 versus 7 967 million USD in FY17 and was 1 574 million USD in 4Q18 versus 2 054 million USD in 4Q17. Normalized profit was negatively impacted by mark-to-market losses linked to the hedging of our share-based payment programs. Underlying profit (normalized profit attributable to equity holders of AB InBev excluding mark-to-market losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 8 644 million USD in FY18 as compared to 8 258 million USD in FY17 and was 2 497 million USD in 4Q18 as compared to 2 450 million USD in 4Q17.

Normalized EPS in FY18 was 3.44 USD, a decrease from 4.04 USD in FY17, and 0.80 USD in 4Q18, a decrease from 1.04 USD in 4Q17. Underlying EPS (normalized EPS excluding mark-to-market losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 4.38 USD in FY18, an increase from 4.19 USD in FY17, and 1.26 USD in 4Q18, an increase from 1.24 USD in 4Q17.

The AB InBev Board proposes a final dividend of 1.00 EUR per share, subject to shareholder approval at the AGM on 24 April 2019. When combined with the interim dividend of 0.80 EUR per share paid in November 2018, the total dividend for FY18 would be 1.80 EUR per share. A timeline showing the ex-coupon dates, the record dates, and the payment dates can be found on page 20.

The business integration resulted in synergies and cost savings of 805 million USD in FY18, of which 217 million USD were delivered in 4Q18. We have now delivered 2 938 million USD of the expected 3.2 billion USD synergies and cost savings on a constant currency basis as of August 2016.

Net debt to normalized EBITDA decreased to 4.6x for the 12-month period ending 31 December 2018 from 4.8x for the 12-month period ending 31 December 2017. We expect our net debt to EBITDA ratio to be below 4x by the end of 2020.

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