AB InBev missed fourth-quarter earnings expectations this week after a performance slump in Brazil, but looked to sweeten investors with the promise of greater synergies from its mega-merger with SAB Miller.
Organic sales growth in the fourth quarter vastly undershot consensus, coming at just 0.2% growth against expectations of 3.4%. The volume picture was equally weak, with a 3.3% decline in organic volumes when expectations were only marginally worse than flat. The brewer also announced a slump in net profits, down to $1.2bn from $8.3bn in 2015 as its bottom line was hit by “very weak” trading in Brazil and financing costs related to its £79bn takeover of SAB Miller. Bernstein called the results “another very weak set of numbers”, noting some key former SAB markets have fallen into volume decline.
Shares dropped 2.6% by Thursday lunchtime to €101.20. There was some comfort for investors as AB InBev upgraded its cost-saving expectations related to the SAB Miller deal from $2.45bn to $2.8bn over the next three to four years. Liberum said ABI has “a long track record of beating and raising synergy targets on deals… but we expect the market will still have concerns about the company’s ability to re-ignite growth”.
Elsewhere, Associated British Foods announced its full-year profits would be significantly higher this year primarily due to the recovering AB Sugar business. However, ABF fell 0.9% to 2,587p on Tuesday as the group added most of the company’s profit boost would arrive in the first half as benefits from the weak pound in its overseas businesses would fade.
Shares in beleaguered Premier Foods were up 2.5% to 40.5p on Wednesday after activist investor Oasis took a seat on the Premier board. Daniel Wosner, MD and head of Europe at the international investment firm, will be appointed to the remuneration committee of the board while Oasis will acquire 10% of the company by 30 June 2018 but hold no more than a 15% stake. .
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