AB InBev share price rises on soaring Mexican sales ahead of SABMiller megabrew deal

 
Clara Guibourg
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Corona beer
The Corona brewer's results are sure to make shareholders happy (Source: Getty)

Sales are soaring for the world’s largest beer brewer, thanks largely to a booming Mexican beer market.

The figures

AB InBev reported that normalised earnings, before interest, tax, depreciation and amortisation rose by 9.6 per cent in the third quarter to $4.4bn, against the same period last year.

Earnings per share were down to $1.02 from $1.42 last year, because of increased financing costs.

The company’s stock rose over two per cent in morning trading on the news, having soared by over 18 per cent since the start of the year.

Why it’s interesting

These results come just weeks after AB InBev confirmed a takeover agreement with SABMiller. As 4 November, the deadline for an official offer on the megabrew deal is drawing near, AB InBev is hoping that the deal will strengthen it in key new markets like Africa.

Mexico is currently its fastest-growing market, will volumes up 11.5 per cent over the year, but the company posted strong growth in the US and the rest of Central America.

AB InBev’s strong sales growth was boosted especially by a flattering comparison to the third quarter last year, when the company was struggling to recover from the World Cup, and its results were “were affected by several one-off events in the US, Brazil and Mexico”.

Not only are we drinking more beer: we’re drinking fancier varieties of it: Premium beer sales have risen especially, pushing the company’s revenue to grow ahead of inflation. AB InBev has adjusted its previous guideline which suggested revenue would grow only in line with inflation.

What they said

Strong topline growth of 7.9 per cent during the quarter was driven by revenue per hectolitre growth of 6.3 per cent, and good volume growth in the US, Mexico and Latin America North. We are particularly pleased with the performance of our Global Brands which delivered double digit volume and revenue growth.

We expect an acceleration in the growth of our sales and marketing investments in the second half of the year, with an increase of 13.7 per cent during the third quarter.

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