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The world’s largest brewer AB InBev has raised its full year profit expectations after sales surged past pre-pandemic levels on volume and price growth in its third quarter.
For the three months to the end of the September, the Budweiser brewer said revenues jumped by 7.9% to $14.3bn, driven by volume growth of 3.4% and revenue per hl growth of 4.3%.
In the nine months of the year so far revenues are up by 17.0% with revenue per hl growth of 4.7% despite ongoing COVID-19 impacts and supply chain constraints in some key markets.
Volume growth 3.4% was made up of own beer volume growth of 2.8% and non-beer volume up by 7.8%. In first three quarters, total volumes have rebounded by 11.9% with own beer volumes up by 12.1% and non-beer volumes up by 10.7%.
The company also posted bottom line improvement, with underlying profit was up to $1.7bn in the quarter compared to $1.6m a year ago. Normalized EBITDA increased by 3% in the quarter to $5.2bn and by 14.5% in the first nine months of the year.
Top-line growth was partially offset by anticipated transactional FX and commodity headwinds, coupled with elevated supply chain costs in certain markets.
Additionally, costs increased due to a volume-driven increase in distribution costs and higher variable compensation accruals.
Michel Doukeris, CEO, commented: “During the third quarter, we delivered top- and bottom-line growth versus both 2020 and pre-pandemic levels of 2019 driven by relentless execution, investment in our brands and accelerated digital transformation.
“As a result of our performance and our continued momentum we are raising the bottom-end of our EBITDA guidance.”
The group expect EBITDA to grow between 10-12% and revenue to grow ahead of EBITDA from a healthy combination of volume and price.
“We remain confident in our execution capabilities, our portfolio performance and our accelerated digital transformation,” the group stated.
“We are focused on meeting the moment and building on our momentum, investing in and accelerating our strategic priorities to drive long-term value creation.”
AB InBev has opened up 6.9% to €52.78 so far this morning.
Morning update
C&C Group has bounced back into profit in the first half of its financial year as revenues jumped 65% on the re-opening of bars, pubs and restaurants.
For the six months to 31 August net revenues increased 65% to €657.3m, reflecting the progressive reopening of the hospitality sector during the latter months of the first half.
“Demonstrating the strength and resilience of the business” C&C returned to operating profits of €16m from a loss of €13.2m in the same period in 2020.
Net revenue for its GB division increased by 35.3% to €146.3m in the period, with margins improving on the re-opening of the more profitable on-trade, while net revenues in Ireland were up 25.9% against the first half last year.
Strong performance in the off-trade has continued with Bulmers and Tennent’s growing volume share.
Its Matthew Clark and Bibendum wholesale businesses rebuilt volumes as the on-trade reopenined, with volumes up 37% in April to 81% in August. During August volume throughput per outlet recovered to broadly 2020 levels, with a robust operational performance and stock availability enabling Matthew Clark to broadly meet demand despite a backdrop of capacity constraints in the industry driven by a shortage of drivers.
Net revenues for the wholesale business were up 106.8% to €385.2m with an operating loss of €4.3m.
C&C said it has effectively managed the various issues affecting the wider industry including shortage of drivers and CO2.
In September 2021, C&C served 89% of outlets versus the same period in 2019 and the rate of sale per outlet has improved with volumes at 93% of the same period in 2019.
Assuming current trading conditions prevail, it expects to deliver full year operating profit in the range of €50-€55m.
CEO David Forde said: “Following the easing of on-trade restrictions over the first half, we are delighted to be back serving our customers and consumers in both indoor and outdoor hospitality across our core markets of UK and Ireland.
“We are encouraged by how quickly the on-trade recovered and we are pleased to report that trading in the first half has been ahead of plan and our inherent cash generating strengths are reflected in the return of the business to cash generation from June 2021.
“With our well invested manufacturing facilities, close to the markets we serve, we have been able to react to demand and allocate resource accordingly, to maintain our output, notably being self-sufficient in CO2, navigating the supply issues faced by the industry. Further, we have been partly insulated from the on-going UK capacity constraints due to driver shortages through our network being owned and operated in-house, in addition to the advantages afforded by our leading scale and reach.
“This has allowed us to broadly meet demand over the peak summer trading period, ensuring we put our brands and our partner’s brands in the hands of the consumers who enjoy them.
“We entered the second half in a good position and we are focused on continuing to build a better business by developing brand and system strength, while navigating the near-term capacity constraints the industry faces.”
Elsewhere, Virgin Wines has posted a 30% jump in sales in its first year as a listed company.
Group revenue for the 12 months to 30 June 2021 was £73.6m, a 30% increase compared to the prior year - the second year in succession in which we have now seen over 30% growth.
During the year it sold over one million cases and served over 250,000 customers. Revenue growth of 73% over the past two years has significantly increased market share whilst also driving adjusted EBITDA.
Adjusted EBITDA was up 46% to £7.0m and the group saw an improvement in adjusted EBITDA margin to 29.5%.
Throughout the year, the group experienced strong levels of customer demand for its product offering, in part driven by an accelerated shift in consumer behaviour towards online retailing as a result of the Covid-19 pandemic alongside increased digital marketing activity and capitalising on the underlying growth drivers across the direct-to-consumer wine sector.
Its active customer base increased 24%, with all core trading channels seeing substantial year-on-year growth, with its WineBank customer base increased 22%, Wine Plan customer base increasing by 16% and Pay As You Go customer base rising by 51%.
Headline profits were hampered by £3.5m of IPO fees, which reduced operaeting from from £4.1m to £2.6m year on year and pre-tax profits from £2.8m to £1.7m.
The company said it continues to achieve positive year-on-year trends since the end of its financial year, resulting in Q1 2022 sales up 13.3% and the number of new customers acquired up 10.7% year-on-year.
This all comes despite the end of lockdowns and the return to full operational capability of on-trade hospitality, “highlighting the continued support from customers acquired over the lockdown period as well as a continued appetite from new potential customers to venture into the online wine and subscription-based markets for the first time”.
It said it took the decision to stock up for the key Christmas trading period last year well in advance to mitigate any issues around lack of stock availability.
CEO Jay Wright commented: “It has been a transformational year for the Group, starting a new chapter on the public markets and emerging in a stronger financial position.
“Our focus this year has been on acquiring increased numbers of new customers, converting them to become long-term advocates of Virgin Wines, whilst maximising the loyalty of our existing customers, and in turn, driving growth in our overall customer base.
“Whilst we remain mindful of the potential impact from the easing of lockdown restrictions on consumer spending patterns, recent customer retention data has proven promising and we are confident that Virgin Wines, underpinned by underlying, subscription-weighted growth drivers, its strong brand and unique customer proposition remains well placed to take advantage of future consumer trends.”
Finally, DS Smith in a pre-close update has said financial performance remains in line with expectations as the growth of online retail continues to support box volume growth.
Corrugated box volume growth has been “very good” throughout the first half, with the resilient FMCG sector, accounting for well over 80% of its volume, has remained particularly strong, with continuing gains with large multinational customers.
Regionally, it has continued to grow in all areas, with the US and Southern Europe performing especially well.
E-commerce has continued to grow despite the re-opening of the high street and the group said it remains a clear area of focus for the business with ongoing investment in its digital capability.
However, it said input costs including energy, OCC and logistics have seen significant increases throughout the half year which it continues to actively manage.
These input cost increases combined with high demand have led to significant paper price rises, which it has sought to recover from customers through ongoing increased packaging prices.
CEO Miles Roberts said: “Overall financial performance remains in line with our expectations with very positive box volume growth, good cost recovery through increasing pricing and an enhanced performance from our US business all combining to more than offset significant input cost increases.
“Looking forward, whilst the macro-economic environment remains uncertain, sustainability and the circular economy, together with e-commerce and digital enablement, remain more relevant than ever and are strong structural drivers of growth. Our long-term strategic focus in these areas as a solely fibre based business together with our comprehensive supply coverage, innovation platforms and robust supply chains, underpin our confidence in the prospects for the business.”
On the markets this morning, the FTSE 100 is down another 0.4% to 7,225.2pts so far today.
Early risers include C&C Group, up 6.8% to 266.6p, McColl’s, up 4.8% to 20.9p and Bakkavor, up 4.2% to 129.4p.
Fallers include Nichols, down 2.1% to 1,150p, SSP Group, down 2.1% to 252.2p and Sainsbury’s, down 2% to 300.5p.
Yesterday in the City
The FTSE 100 lost 0.3% to close at 7,253.2pts.
Pub groups were boosted by changes to alcohol duty in the Budget, particularly the cut of duty on draught beers and ciders, with JD Wetherspoon up 5.3% to 1,039p, Mitchells & Butler up 5.7% to 260.6p and Marston’s up 6.3% to 81.5p.
Fallers included FeverTree, down 3.4% to 2,299p, PZ Cussons, down 2.7% to 216p, Naked Wines, down 2.2% to 665p, McColl’s, down 2.2% to 20p, Science in Sport, down 2.1% to 71p and THG, down 1.8% to 237.6p.
The day’s risers included McBride, up 8% to 70.6p, Deliveroo, up 3.8% to 276.8p, Premier Foods, up 2% to 112.8p, Compass Group, up 2% to 1,524p, Nichols, up 1.7% to 1,175p and Sainsbury’s, up 1.7% to 306.5p.
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