Anheuser-Busch InBev may be facing trouble over beer margins

Anheuser-Busch InBev may be facing trouble over beer margins

Price increases managed to offset light volumes in Anheuser-Busch InBev's latest results, but the brewer is struggling over margin pressures, an analyst has warned.

The brewer today (31 October) saw organic volumes increase by 0.4% in the nine months to the end of September, while third-quarter volumes fell 0.3%. Latin America organic volumes were particularly weak, rising by 0.1% compared to analyst Nomura's prediction of a 3% increase.

Meanwhile, group revenue per hectolitre for Q3 increased by 9% compared to Nomura's 5.3% estimate, driven by Brazil.

However, the analyst said: “Despite unusually strong pricing, margins contracted by 0.1 percentage point in the quarter.” Coupled with margin contractions in Q2, the drop indicates “that margin expansion in beer is becoming tougher”, Nomura added.

Nomura also said that A-B InBev missed the analyst's earnings-per-share target because of higher-than-expected net finance costs. The analyst said it is unclear if the costs, which include costs of currency and the payment of bank fees and taxes, are one-offs.

Nomura said its full-year guidance for the brewer remains unchanged, as the high finance costs should be “broadly offset” by a smaller tax bill.