Owner of Castle, Black Label loses R200bn in minutes after disappointing the market

Anheuser-Busch InBev’s share price lost 10% in the first few minutes of trading on Friday morning – shaving more than R200bn off its market value.

This was in reaction to a trading update that the company, which bought SABMiller in 2016, released earlier on Friday. AB-Inbev is the world’s largest beer maker, and apart from SA brands like Castle and Black Label also owns Budweiser, Corona and Stella Artois.

The company reported that its earnings before interest, tax, depreciation and amortisation (Ebitda) was flat for the quarter. The market was expecting a rise of 3%, Reuters reported.

Its share price slumped 10% in the first 20 minutes of trading, to hit R1 204. By 10:30, its share price was around 9.4% lower at R1 216.

Total volumes sold fell by 0.5% in the third quarter, with its own beer volumes down 0.9% and non-beer volumes up 4.0%, the company reported.  

"Solid growth from markets such as Mexico, South Africa and Colombia was more than offset by declines in China and the US, both primarily driven by shipment phasing impacts."

Its revenue grew by 2.7% over the past quarter, but while the company says it has now achieved $3.32bn in cost savings since taking over SABMiller, its cost of sales increased by 6.9% in the third quarter due to higher input costs and a weakening in the currencies in some of its markets.

Its profit margin contracted as a result, with its Ebitda margin contracting by 107 basis points to 40.2%.

Its underlying earnings per share (which excludes gains thanks to hedging contracts for share-based payments and the impact of hyperinflation) fell to $0.94 in the third quarter from $1.11 a year ago. For the first nine months of its financial year, its underlying earnings fell by more than 5%.

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