H1 covered part of the Brazil World Cup

H1 covered part of the Brazil World Cup

It's all over bar the shouting, as they say in football circles.

So, it was particularity apt that World Cup sponsor Anheuser-Busch InBev's H1 report yesterday, which included the lead-up to and first three weeks of the football tournament, was described by one analyst as “slightly noisier than usual”.

This was, Bernstein's Trevor Stirling continued, because the group's EBIT was boosted by a number of one-off gains in the US, including a US$233m boost from the restatement of pension liabilities. However, strip away the clutter and what Stirling believes is left is a performance equal to Germany winning the World Cup - ie “broadly in-line with our expectations”.

Remaining on the subject of Brazil, Stirling said that the effect of A-B InBev's sponsorship appears softer than expected, although he admits his predictions had been “bullish” and that performance was “strong in absolute terms”.

This will no doubt be a relief to A-B InBev, the sole alcohol sponsor of the World Cup, and the company appears to have fared much better from the tournament in Brazil than fellow sponsor The Coca-Cola Co.

The soft drinks giant this week posted flat sales in Q2 in Brazil despite a huge marketing campaign, and CEO Muhtar Kent was forced to defend the activation.

A-B InBev, on the other hand, saw beer volumes climb by 7.2% in Q2, while soft drinks (which interestingly, considering Coca-Cola's investments, comprise partly PepsiCo brands, as A-B InBev is the latter's Brazil distributor) increased volumes by 8.8%.

The sheen may be somewhat rubbed off those numbers, however, when you consider that, overall, Brazil's beer market jumped by 6.8% in Q2, meaning A-B InBev's hard work and financially outlay resulted in a 0.4 percentage point growth advantage.

Of course, management would point to the more intangible effects of the campaign and the wider boost to global sales (plus the fact that A-B InBev's AmBev controls most of the market). And CEO Carlos Brito did exactly that in a call with analysts yesterday when he highlighted strong volumes growth in the US, South Korea, Russia and Italy while noting that, in Brazil, the investments were not only for the five-week duration of the cup. “We understand that this will be there for many years,” Brito said.

Despite the optimism, analysts on the call with Brito yesterday appeared worried that the World Cup masked underlying weaknesses in Brazil's beer market. One analyst who estimated a 1% beer volumes growth rate once the World Cup boost was taken out, was quickly corrected by the CEO, who said A-B InBev's estimate was 2.6%.

And yet, analysts were not to be swayed by the erratum. “Two-year stacked trends in underlying growth have been flattish since 2011,” Stifel's Mark Swartzberg says about Brazil in a note. “We no longer see a macroeconomic picture supporting accelerating underlying growth.”

It seems that underneath all of Brazil's shouting, there is silence.