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AB InBev halves dividend as it tackles debt
AB InBev halves dividend as it tackles debt. The global brewing giant has a long way to go to meet its objective of reducing net debt to two times EBITDA
Anheuser-Busch InBev plans to slash its annual dividend in half as it tackles its high debt pile. The global brewer says its board has approved an interim dividend of "0.8 per share and has proposed a final dividend of "1 for a total annual dividend payment of "1.80, down from "3.60 last year. Its shares fell sharply.
AB InBev reported disappointing third-quarter sales in South Africa, where April's VAT increase and a number of petrol price hikes have cut into the disposable income of beer drinkers. Revenue declined by mid-single digits as volumes fell by low single digits. The brewer also faced tough markets in Brazil and Argentina. However, good growth in own beer volumes in Europe, Mexico and many other African countries compensated for these three markets.
Revenue from its global brands, which include Budweiser, Stella Artois an Corona, improved by 7.7% globally and 10.6% outside of their home markets. Over the nine months to end-September, they were up 8.7% globally and 13.3% outside of their home markets.
Earnings before interest, tax, depreciation and amortisation rose 7.5% as margins expanded by 116 basis points to 40.3%. Normalised profit fell 37% to $1.61 billion due to mark-to-market losses linked to the heading of its share-based payment programs. Stripping those out, it would have been 5% down at $2.23 billion. Earnings per share also fell by 37% to 82c.
Following the dividend rebase of 50%, AB InBev said it expected dividends to grow in the future in line with the non-cyclical nature of its business. In the short term, however, it said growth would be modest given the importance of deleveraging.
It's aiming to reduce debt to a ratio of two times net debt to EBITDA and says it will prioritise debt repayment to meet this objective. At the end of June, net debt had increased to $108.8 billion, giving it a net debt to normalised EBITDA ratio of 4.87 times. However, it said its cash flow was seasonal, with the majority generated in the second half of the year. AB InBev paid $103 billion for SABMiller two years ago.
While recognising volatility in some of our key markets, we expect to deliver strong revenue and EBITDA growth in FY18, driven by the solid performance of our brand portfolio and strong commercial plans," AB InBev said. "We remain confident that growth will accelerate in the balance of the year."
Its shares closed 10.6% lower at R1 073.
AB InBev Halves Dividend as Beer Remains Out of Favor - Wall Street Journal
-- zxfutures (@zxyfinancial) October 25, 2018
Bud plight: AB InBev debt detox points to flat future @edwardcropley @aimeedonnellan pic.twitter.com/YIMS5Cnwd5
-- ReutersBreakingviews (@Breakingviews) October 25, 2018
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By INCE|Connect NewsAB InBev halves dividend as it tackles debt. The global brewing giant has a long way to go to meet its objective of reducing net debt to two times EBITDA
Anheuser-Busch InBev plans to slash its annual dividend in half as it tackles its high debt pile. The global brewer says its board has approved an interim dividend of "0.8 per share and has proposed a final dividend of "1 for a total annual dividend payment of "1.80, down from "3.60 last year. Its shares fell sharply.
AB InBev reported disappointing third-quarter sales in South Africa, where April's VAT increase and a number of petrol price hikes have cut into the disposable income of beer drinkers. Revenue declined by mid-single digits as volumes fell by low single digits. The brewer also faced tough markets in Brazil and Argentina. However, good growth in own beer volumes in Europe, Mexico and many other African countries compensated for these three markets.
Revenue from its global brands, which include Budweiser, Stella Artois an Corona, improved by 7.7% globally and 10.6% outside of their home markets. Over the nine months to end-September, they were up 8.7% globally and 13.3% outside of their home markets.
Earnings before interest, tax, depreciation and amortisation rose 7.5% as margins expanded by 116 basis points to 40.3%. Normalised profit fell 37% to $1.61 billion due to mark-to-market losses linked to the heading of its share-based payment programs. Stripping those out, it would have been 5% down at $2.23 billion. Earnings per share also fell by 37% to 82c.
Following the dividend rebase of 50%, AB InBev said it expected dividends to grow in the future in line with the non-cyclical nature of its business. In the short term, however, it said growth would be modest given the importance of deleveraging.
It's aiming to reduce debt to a ratio of two times net debt to EBITDA and says it will prioritise debt repayment to meet this objective. At the end of June, net debt had increased to $108.8 billion, giving it a net debt to normalised EBITDA ratio of 4.87 times. However, it said its cash flow was seasonal, with the majority generated in the second half of the year. AB InBev paid $103 billion for SABMiller two years ago.
While recognising volatility in some of our key markets, we expect to deliver strong revenue and EBITDA growth in FY18, driven by the solid performance of our brand portfolio and strong commercial plans," AB InBev said. "We remain confident that growth will accelerate in the balance of the year."
Its shares closed 10.6% lower at R1 073.
AB InBev Halves Dividend as Beer Remains Out of Favor - Wall Street Journal
-- zxfutures (@zxyfinancial) October 25, 2018
Bud plight: AB InBev debt detox points to flat future @edwardcropley @aimeedonnellan pic.twitter.com/YIMS5Cnwd5
-- ReutersBreakingviews (@Breakingviews) October 25, 2018