- Anheuser-Busch InBev reported a significant dip in profits for the first quarter Wednesday, which fell to $844 million from $2.3 billion last year. The company attributed the decline to currency headwinds, particularly in Latin American markets, and one-off financing costs, including bonds issued to pre-fund the SABMiller merger.
- Revenue also decreased to $9.4 billion from $10.45 billion in the year-ago period, which missed analysts' estimates.
- A major hit for the company came from Brazil, where AB InBev lost market share and beer volumes dropped 10%.
With its SABMiller merger pending, AB InBev offered last week to sell off SABMiller's Eastern European brewing assets to earn EU approval. That's in addition to AB InBev's $2.9 billion deal with Japan's Asahi Group Holdings to divest SABMiller's premium European brands Grolsch and Peroni. The European Commission, the EU's antitrust regulator, is expected to hand down its verdict on the merger by May 24.
While AB InBev is bent on selling the SABMiller assets to make this merger a reality, the company is also on a craft beer buying spree. That has included a handful of craft brewers in the U.S., most recently Devils Backbone announced last month.
But AB InBev isn't just acquiring craft brewers to buy up the competition. The company is positioning itself to play a larger role in innovation of the beer industry. It partnered with Techstars and its own venture arm ZX Ventures to launch a new beer industry accelerator, Techstars Connection.
AB InBev is still the top global beer producer, with prospects of growing even larger should SABMiller go through, but it's not immune to competition. In addition to the thousands of craft brewers that are turning consumers' heads away from light beer and domestics, AB InBev also has to deal with the likes of Constellation Brands. While AB InBev struggled with profit and revenue this past quarter, Constellation reported increases of 17% for net income and 13.8% for net sales last month.
Still, AB InBev executives remain confident that this quarter's lagging performance was expected and the company will turn things around in the second half of the year.