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Anheuser-Busch InBev on Thursday reported a big drop in profit for the second quarter, and as expected results in North America suffered after consumer boycotts of Bud Light.
In North America, the company’s operating profit on a comparable basis fell 27% to $1 billion, as revenue declined by 9% to $3.95 billion and volumes skidded by 14%. Sales have fallen sharply since transgender star Dylan Mulvaney made a social-media post about a personalized can of Bud Light, triggering anger as well as confusion by its customers.
Two-thirds of the profit drop was due to market share performance and the remainder from productivity loss, increased sales and marketing investments and support measures for its wholesalers, the company said.
But its worldwide operating profit actually improved by 2%, after growing profits in every other region, including a sharp 47% improvement in South America. Revenue globally rose by 7% to $14.79 billion.
So how then did the company report a 79% decline in second quarter profit, to $339 million? The answer is derivatives: the company recorded a $1.08 billion mark-to-market loss on hedges for its share-based payment programs and shares issued in relation to the combination with Grupo Modelo and SAB.
What the company calls underlying earnings per share fell a penny to 72 cents. The company said it expects its operating profit to grow between 4% and 8%, and revenue to grow faster, for the year.
“Given the solid enough Q2 delivery, we expect little change to FY23E consensus earnings estimates following these results and near-term sentiment to continue to be driven by Bud Light debates as we head into a period of more shelf resets in the fall,” said Simon Hales, an analyst at Citi.
Anheuser-Busch InBev shares
ABI,
rose 2% in early Brussels trade. Its U.S.-listed shares
BUD,
have fallen by 6% this year.
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