Thank heavens for the vast (and still only partially-tapped) potential of emerging markets.
AB-Inbev SA (BUD) posted a forecast-busting 6.2% rise in revenue in the first quarter, due to a blowout New Year in China and a surprisingly robust performance in crisis-ridden Brazil.
The company said in a statement that global sales of Budweiser were up 6.2% from a year earlier, as strong demand in China more than made up for a U.S. market where comparisons suffered from a blip in last year’s trade. U.S. wholesalers had stockpiled in the first three months of 2014 in anticipation of a labor dispute, consequently 1Q 2015 sales to wholesalers were down 6% on the year. It put a brave face on the slow seepage of market share by Budweiser (down another 0.2 percentage points in the quarter), saying it was “one of its best performances for several quarters.”
Volumes also dropped by nearly 6% in Europe, the group’s other mature home market, with a particularly disappointing 7% decline in the U.K..
The most eye-catching part of the company’s release was its ability to grow revenue in Brazil, one of the world’s largest markets, by 10% in the quarter (on a mere 1% rise in volume sales), despite an economic slowdown and a 20% drop in the real’s value against the dollar over those three months.
AB-InBev put the result down to a bigger share of premium brand sales, and the rewards of controlling more of its distribution chain (70% of its Brazilian sales go through internal channels). It warned though that foreign exchange movements could hit it later this year.
Basic operating income across the group grew 11% on the quarter, with the profit margin expanding by 1.7 percentage points, while earnings per share were up 60% from a year earlier at $1.40. Attributable net profit nearly doubled to $2.68 billion from $1.37 billion, thanks to a $757 million gain on derivatives linked to its stock-based compensation scheme.