AB InBev’s Revenues Soared 2.2% in Q2 2023

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AB InBev generated total second quarter revenue of $15.1 billion, up 3.4% on an organic basis excluding currency effects. Despite a 10.5% decline in revenue in the second quarter, revenue per hectoliter grew by 5.2% driven by revenue management initiatives.

The company beat quarterly earnings forecasts and held its 2023 profit forecast. The brewer increased sales of its global brands, and earnings rose 5% in the second quarter on an adjusted basis, double the rate analysts expected.

However, US revenue fell 10% in the second quarter as sales of its top brand, Bud Light, slumped, costing AB InBev about $395 million in lost US sale.

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Key Points About AB InBev and Its Recent Performance

  1. Strong Revenues: AB InBev (BUD) has been benefiting from consumer demand for its brands. In the second quarter of 2023, the company’s revenues reached $15,120 million, a 2.2% increase from the previous year.
  2. Organic Growth: AB InBev experienced organic revenue growth of 7.2%, mainly due to growth in revenue per hectoliter (hl) and improvement in more than 85% of its markets. It saw double-digit growth in four of its five operating regions.
  3. Global Brand Performance: Key global brands like Budweiser, Corona, and Stella Artois performed well outside their home markets, with impressive growth rates ranging from 14.5% to 23.7%.
  4. Premiumization: The company’s focus on premiumization efforts, including pricing actions and expansion of the beer category, contributed to a 9% organic growth in revenue per hl.
  5. Beyond Beer Portfolio: AB InBev is expanding its “Beyond Beer” portfolio, which includes low-alcoholic or non-alcoholic drinks. This portfolio contributed over $385 million to total revenues in Q2 2023.
  6. Digital Transformation: The company is investing in digital platforms and reported that about 64% of its revenues in the second quarter came from B2B digital platforms. It has been growing its user base through platforms like BEES and Zé Delivery.
  7. Challenges: AB InBev faced higher costs and soft margin trends in Q2, primarily due to commodity headwinds and increased supply-chain costs.
  8. Earnings and Stock Performance: Normalized EBITDA declined by 3.7% year-over-year, and underlying EPS fell by 1.4% in Q2 2023. AB InBev’s stock has gained 15.5% in the past year, outperforming the industry’s growth of 2%.
  9. Positive Indicators: The company’s PEG ratio is 1.71, better than the industry average of 1.88, suggesting it could be a good value. It also has a VGM Score of B and a long-term earnings growth rate of 10.8%.
  10. Other Considerations: The article mentions other companies (Flowers Foods, The J. M. Smucker Company, and Utz Brands Inc.) as potential investments with growth prospects.
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