AB InBev's posts mixed Q4 results, shares slide 4%

Anheuser-Busch InBev (BUD), the world's largest brewer, reported its Q4 and FY23 earnings, showcasing a mixed performance in various aspects.  Shares broke below key support at the $68 level in intraday trade and are setting up for a key test at the 200-sma ($58.81). 

The company's earnings per share (EPS) of $0.82 for Q4 outperformed expectations, but total revenues fell 1.3% year/year to $14.47 billion, missing estimates. The company's revenue performance in Q4 2023 was strong, with a 6.2% increase and a revenue per hectoliter (hl) growth of 9.3%.

For the full year 2023, revenue increased by 7.8% with a revenue per hl growth of 9.9%. AB InBev's global brands, including Budweiser, Stella Artois, Corona, and Michelob Ultra, experienced a 24.6% increase in combined revenues outside their respective home markets in Q4 2023, and an 18.2% increase for the full year 2023.

The company's digital platforms have also seen significant growth, with approximately 70% of revenue generated through Business-to-Business (B2B) digital platforms, and the monthly active user base of its BEES platform reaching 3.7 million users. AB InBev's digital direct-to-consumer ecosystem generated over 550 million USD in revenue. 

Total volumes, however, declined in both Q4 and FY 2023. In Q4, total volumes declined by 2.6%, with own beer volumes down by 3.6% and non-beer volumes up by 3.0%. For the full year 2023, total volumes declined by 1.7% with own beer volumes down by 2.3% and non-beer volumes up by 2.1%. 

Normalized EBITDA increased by 6.2% to 4,877 million USD in Q4 2023, with a normalized EBITDA margin contraction of 2 basis points (bps) to 33.7%. 

Underlying profit attributable to equity holders of AB InBev was 1,661 million USD in Q4 2023, compared to 1,739 million USD in Q4 2022. Underlying earnings per share (EPS) were 0.82 USD in Q4 2023, a decrease from 0.86 USD in Q4 2022. 

As of 31 December 2023, the net debt to normalized EBITDA ratio was 3.38x, compared to 3.51x at 31 December 2022.

AB InBev's Board has proposed a full-year 2023 dividend of 0.82 EUR per share, subject to shareholder approval at the AGM on 24 April 2024. The company has also completed 870 million USD out of a one-billion-USD share buyback program announced on 31 October 2023. 

AB InBev provided it"s outlook for 2024, expecting EBITDA to grow in line with its medium-term outlook of between 4-8%. The outlook also includes projections for net finance costs, net capital expenditures, and other macroeconomic conditions.

The company also reached a significant agreement with the Teamsters union. This news comes alongside the company's earnings report for the fourth quarter of 2023.

In conclusion, AB InBev's Q4 and FY23 earnings report showcases a mixed performance, with strong revenue growth but declines in total volumes and margin contraction. The company's digital platform growth and global brand expansion are positive indicators, but the decline in total volumes and margin contraction are areas of concern. AB InBev's outlook for 2024, including its EBITDA growth expectations and capital allocation plans, provides a roadmap for the company's future performance.