AB InBev projects 10% decline in first-quarter profit as coronavirus hits harder
Anheuser-Busch InBev, the world’s largest brewer, has projected a 10% decline in first-quarter profit after the coronavirus outbreak hit beer sales during the Chinese New Year, sending its shares skidding.
The beer behemoth said the virus had led to a significant decline in demand in China – both at bars and drinking at home, notably during the Chinese New Year.
According to the company, the outbreak, along with an expected weaker Brazilian market, could lead to a 10% drop in first-quarter core profit on-year.
AB InBev said that it expected 2020 core profit growth of between 2% and 5%, with most expansion occurring in the second half.
The Belgium-based company, which sells more Budweiser in China than in the lager’s key U.S. market, said the disease shaved up to $285 million off its revenue in China in the first two months of this year, 2.3% of its first-quarter group revenue last year.
AB InBev is the most recent alcoholic beverage company to inform the public that the epidemic is taking a toll on business, following Diageo’s alert on recently that the fast-spreading virus in greater China and the Asia Pacific region could knock up to $260 million off its profit in 2020.
According to AB InBev CEO Carlos Brito, “Nightlife ground to a halt in China in the third quarter last year, with many bars and restaurants shutting down due to the virus.
“Our performance in 2019 was below our expectations, and we are not satisfied with the results.
“More than half of the company’s 33 Chinese breweries have reopened with the exception of the one in the central Chinese city of Wuhan,” Brito said.
The company’s fourth-quarter core profit declined 5.5% to $5.34 billion, worse than market expectations of a 1.9% drop.
The virus that can lead to pneumonia is believed to have originated in a market in Wuhan late last year.
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