City snapshot: AB InBev improves profits but volumes fall back

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AB InBev has posted a rise in underlying profits in its second quarter, but sales volumes went backwards in the period as beer sales fell.

The world’s biggest brewer said its second quarter to the end of June saw the continued execution of of strategy its strategy to deliver double-digit EBITDA growth and strong margin expansion.

Normalized EBITDA in the quarter increased by 10.2% to €5.3bn, with a normalized EBITDA margin expansion of 236bps to 34.6%.

Total revenues were up 2.7% in the second quarter, with revenue per hl growth of 3.6%.

It saw a 3.3% increase in combined revenues of its megabrands, led by Corona, which grew by 5.6% outside of its home market.

However, total volumes fell back by 0.8%, with own beer volumes down by 1.3% and non-beer volumes up by 3.4%.

The group said volume growth in our Middle Americas, South America, Europe and Africa regions was primarily offset by performance in China and Argentina.

This EBITDA growth was driven by production cost efficiencies and disciplined overhead management, it said.

For the full year it expects EBITDA to grow in line with our medium-term outlook of between 4-8%.

CEO Michel Doukeris commented: “Our global momentum continued this quarter. The strength of our diversified footprint and consumer demand for our megabrands delivered another quarter of broad-based top- and bottom-line growth.

“EBITDA grew by double-digits and the continued optimization of our business drove a 25% increase in Underlying EPS. We are encouraged with our performance in the first half of the year and remain focused on consistent execution of our strategy.”

Morning update

Consumer health group Haleon has posted a “good” first half, with “solid” organic revenue and profit growth.

First half organic revenue growth was up 3.5% with 4.3% price and a 0.8% decline in volume/mix

This trend improved in the second quarter, with organic revenue growth of 4.1% with 3.4% from price and volume/mix back in growth of 0.7%.

Haleon’s power brands posted 5.6% growth in the first half, with Sensodyne, parodontax and Centrum up double digit.

Some 69% of its business portfolio gained or maintained market share in the period.

Overall reported revenues for the first half declined 0.8% to £5.7m due to the impact of foreign exchange (3.4%) and M&A (0.9%).

Meanwhile, organic profit increased 11% with gross margin expansion due to lower cost inflation, and productivity savings, partly offset by strong brand investment in marketing and R&D

Adjusted operating profit margin of 22.7% was up 50bps and by 160 bps organically.

Reported operating profit edged up 0.9% to £1,151m was impacted by restructuring costs including the productivity programme and Maidenhead closure costs, as well as M&A impact and adverse FX.

As a results of the strong first half performance, Haleon upped full year guidance, with organic operating profit growth now expected to be high-single digit and organic revenue growth expected be between 4-6%.

CEO Brian McNamara commented: “Haleon reported a good first half, with solid organic revenue growth and strong organic operating profit growth, demonstrating that our strategy is delivering. Whilst as expected, comparatives impacted results, revenue growth accelerated in the second quarter with improved volume mix.

“Momentum in Oral Health and Vitamins, Minerals and Supplements was strong, reflecting continued successful innovation combined with excellent execution in market.

“We continue to implement change to become more agile and competitive, with the recent news of the divestment of the NRT business outside of the US as another example of this.

“Looking ahead, we are well positioned to deliver on our full year organic revenue growth guidance and now expect high-single digit organic profit growth. Given the successful delivery of the strategy to date Haleon is also well placed over the medium term.”

Elsewhere this morning, retailer Pets at Home has posted a “resilient” first quarter, with sales edging up in the period.

Total group revenue in the 16 weeks to 18 July growth was up 1% to £441.1m, with group like-for-like revenue up 0.5%.

Revenue from consumers was up 1.5% in the period to £567.7m, supported by growing average customer spend and growth in its Pets Club membership, but offset by the impacts of market normalization, as the pet population stabilizes, and slowing inflation.

Retail revenue was down 0.8%, with LFL sales down 0.8% despite a stronger performance through the second half of Q1 driven by consistent market share gains in key categories.

Meanwhile its vets group revenue remain strong growing 17.1%, and LFL of 13.3%, driven by higher average spend and growth in visits, supported by improved clinical capacity and continued strong new customer sign-ups.

Gross margins were resilient through Q1, helped by favourable product mix including own label strength and good performance in some accessories categories.

The group made no change to guidance for its 2025 of group underlying PBT of £144m.

Sales trends remain in line with expectations, with LFLs expected to improve in future quarters as comparatives ease and it benefits from continued strong availability and its new platform.

CEO Lyssa McGowan said: “We are pleased to have delivered a resilient Q1, with our growth improving through the quarter as our offer continued to resonate well with UK pet owners. The benefits of our investments in logistics, stores and digital are coming through, and our unique joint venture vets continued to deliver differentiated performance, growing visits and attracting new customers, driven by our passionate, independent practice owners.

“As ever it is our people, and their unrivalled expertise, that continue to drive our business. I would like to thank our colleagues and vet partners for their ongoing passion and dedication to creating a better world for pets and the people that love them.”

On the markets this morning, the FTSE 100 is flat at 8,367.3pts.

Early risers include Kerry Group, up 3.7% to €86.35, Science in Sport, up 3.5% to 23.6p and Marks & Spencer, up 2.7% to 337.3p.

Fallers include Glanbia, down 9.4% to €16.94, Nichols, down 6.3% to 1,147.7p and Reckitt Benckiser, down 2% to 4,095p.

Yesterday in the City

The FTSE 100 jumped 1.1% yesterday to 8,368pts and close in on an all-time high.

While industrial stocks led the rally, grocery risers included Just Eat Takeaway.com, up 8.4% to 991p, SSP Group, up 3% to 183p, THG, up 2.1% to 66.5p, Premier Foods, up 1.8% to 180p, WH Smith, up 1.8% to 1,320p and Greggs, up 1.7% to 3,134p.

The day’s fallers included Naked Wines, down 1.6% to 56.8p, PZ Cussons, down 1.1% to 105.8p, Coca-Cola Europacific Partners, down 1% to 67.5p, Marks & Spencer, down 0.9% to 328.3p and Sainsbury’s, down 0.8% to 275.4p.

While industrial stocks led the rally, grocery risers included Just Eat Takeaway.com, up 8.4% to 991p, SSP Group, up 3% to 183p, THG, up 2.1% to 66.5p, Premier Foods, up 1.8% to 180p, WH Smith, up 1.8% to 1,320p and Greggs, up 1.7% to 3,134p.

In France, Danone shares were up 2.2% to €60.16 as it outperformed market expectations in a “strong” first half as its turnaround took hold.