Insight - A-B InBev expects tougher H2, to raise ad spend
Operating profits and margin growth will slow due to planned higher marketing spend, tougher comparables with the same period of 2008 and lower synergies, which were 60% "front-loaded" on the first half of the year, Anheuser-Busch InBev CEO Carlos Brito said in the group's half-year results conference call today (13 August).
Marketing spend will rise in the second six months of the year due to several planned product launches and line extensions, said the brewer, without giving specific details of plans.
The Belgium-based brewer today beat analysts' expectations with a 3% organic sales rise for the six months to the end of June, as well as a rise in profits and strong progress on synergies from InBev's US$52bn takeover of Anheuser-Busch late last year.
In the conference call, Brito reiterated that the firm still aims to complete "at least $7bn of divestitures" as part of the A-B integration process.
The group sold off $3.56bn-worth of assets in the first half of 2009, enabling to pay off a $7bn bridge loan taken out to fund the A-B acquisition and due in November.
The brewer continued with its policy of not commenting on possible disposal targets.
Reports at the end of last month claimed that A-B InBev had abandoned the expected sale of brewing assets across Central & Eastern Europe due to a lack of bids.
Today, the brewer made no mention of Eastern Europe operations outside of Russia and Ukraine.
One analyst told just-drinks that the group "needs to get moving if it wants to sell the remaining $3.5bn assets".
On the performance of brands, Brito said that the group grew market share in seven key markets, including US, UK and Brazil.
"Stella Artois continues to improve its brand health," he said, praising the success of new marketing campaigns and the launch of Stella Artois at 4% abv. Shipments of Stella to the US rose by nearly 14% for the half-year.
Elsewhere in the US, Brito said that a strong performance from Bud Light Lime helped to offset a weak volume performance in North America. Brito added: "We have observed some trade down in some markets, [but] the good thing in the US is consumers are staying within our portfolio."
Trade unions in Belgium claimed victory last night as they agreed to end worker blockades of Anheuser-Busch InBev breweries in return for talks with the group on alternatives to its proposed job cuts ...
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