By Tom Fairless
BRUSSELS--Anheuser-Busch InBev NV, the world's largest brewer,
reported a sharp drop in net profit for the second quarter, as
weakness in the U.S. and Brazil weighed on sales.
Leuven, Belgium-based AB InBev said Thursday net profit fell to
$1.9 billion in the three months to end-June from $2.8 billion a
year earlier, missing analysts' estimates. The brewer booked a loss
of $139 million on derivatives used to hedge the price of shares it
hands out as compensation to employees.
Revenue for the maker of Budweiser, Corona and Stella Artois
fell to $11.1 from $12.2 billion a year earlier. The brewer
attributed the decline to weak economic conditions and poor weather
in several key markets, as well as a tough comparison with a
year-earlier period that included the soccer World Cup in
Brazil.
AB InBev's shares fell as much as 4.9% on the Brussels stock
exchange before recovering some of the lost ground.
"All in all the [result] was below the market's estimates on
volumes, top line, the operating result and the bottom line,
admittedly on difficult" comparisons with the year-earlier period,
wrote Hans D'Haese, an analyst at Bank Degroof, in a note to
clients.
The brewer's performance in the U.S., which accounted for around
a third of total revenue last year, continues to weigh on
profit.
Several of its flagship brands, including Budweiser and Bud
Light, are still losing market share in the country. The brewer has
been struggling for years to adjust to changing tastes as U.S.
consumers increasingly favor craft beers over AB InBev's
mass-market lagers.
"We still have a long way to go to stabilize Budweiser's market
share in the U.S.," AB InBev Chief Executive Officer Carlos Brito
said on a call with analysts.
While advertising campaigns have helped to slow Budweiser's
declining market share, Felipe Dutra, AB InBev's chief financial
officer, said it was "a multiyear effort."
Sales in Brazil fell around 8% due to a weak economy and a
comparison with a year-earlier period during which the country
hosted the soccer World Cup tournament, Mr. Brito said. The World
Cup effect accounted for around 5.5 percentage points of the
decline, the brewer said.
In China, sales were "essentially flat" despite poor weather and
"economic headwinds," the brewer said. Mr. Brito said he felt
"good" about progress in the country this year, and that sales
would improve with warmer weather.
A bright spot was Mexico, where sales rose around 4%, and beer
volumes also grew in Argentina and Canada.
AB InBev said it had completed a previously announced $1 billion
share buyback program in June. "At this point we didn't feel
necessary to launch a new program," Mr. Dutra said.
Write to Tom Fairless at tom.fairless@wsj.com
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