BRUSSELS — Anheuser-Busch InBev NV on Wednesday said unfavorable currency effects, one-off financing costs and weak business in Brazil damaged earnings in the first quarter.
The Belgium-based brewer posted net profit of $844 million for the quarter, down from $2.3 billion a year earlier, largely due to adverse exchange rates for Latin American currencies and one-off financing costs, including increased interest expenses for bonds issued to pre-fund .
The company said revenue totaled $9.4 billion in the quarter, down from $10.45 billion the previous year and missing analyst expectations of $10.04 billion.
Shares in brewer opened down 3.35 percent on the Brussels Stock Exchange.
In Brazil, AB InBev said it lost market share in the quarter and saw beer volumes decline by 10 percent because of a more difficult economic environment compared with last year.
“Brazil faced one of its most challenging quarters in many years,” said chief financial officer Felipe Dutra in a conference call. He declined to quantify the market share loss in Brazil but said he expects it only to be a short-term phenomenon.
Dutra said the earlier Carnival holiday in 2016, which marks a short summer vacation, and price increases to make up for adjustments to state and federal taxes also contributed to poor performance in the country.
Despite the weak first quarter, AB InBev said it still expects revenue in Brazil to grow by “mid-to-high single digits” for the full year.
In the U.S., AB InBev said brand market share in the U.S. for Bud Light, one of the company’s most important brands, shrank by about 0.35 percentage point in the quarter.
But the company said the trend was improving and already saw benefits from a continuing campaign for Bud Light that it outlined at this year’s Super Bowl. A fresh visual brand identity for the U.S.’s top-selling beer should also help boost sales, the company said.
“We believe Bud Light is heading in the right direction even though a lot more has to be done to return the brand to growth,” Dutra said.
The beer company said it still aims complete its $108 billion acquisition of beer rival SABMiller in the second half of this year, in a bid to make the world’s largest brewing company.
Belgium-based AB InBev is in the middle of a complicated deal to buy the world’s second-largest brewer, SABMiller PLC of London.
AB InBev has to win regulatory approval from the U.S., the European Union, China and other countries to close the deal, which the firms aim to do in the second half of 2016. Should the acquisition fall apart, AB InBev would have to pay $3 billion to SABMiller.
AB InBev has found buyers for some of the SABMiller’s assets in U.S., Europe and China in a bid to win regulatory approval of the merger in those regions. As part of the deal,
As part of its efforts to win approval from the European Commission, the company last week , including Pilsener Urquell, despite the little overlap with its own brands in the region. The Belgian brewer is aiming to clear the deal in the first phase of the commission’s review.
AB InBev said it still expects 2016 revenue to grow “organically” ahead of inflation around the world.
