Sales of better beer boosts AB InBev

Better sales of more expensive beer helped AB InBev shrug off the overall drop in volumes at the Belgium-based brewer behind Stella Artois and Budweiser.

Group revenues climbed to $10.5bn, an organic growth rate of 6.2 per cent thanks to strong performance in China and parts of central and Latin America, in its first quarter. This was well ahead of the consensus of expectations of analysts, who had pencilled in a 3.6 per jump.

Improved growth in markets such as Mexico, where volumes grew 2.2 per cent helped offset weaker performance in big markets such as the US, which suffered a 5.6 per cent drop in volume.

Overall, beer volumes across the group dropped 1.2 per cent.

Across the group, adjusted earnings before interest, tax and depreciation rose 2.2 per cent to $4bn.

The brewer's reported bottom line benefited from its recent share price rally. This resulted in a mark-to-market benefit from its share payment programme that triggered a $757m adjustment. In the same period last year, AB InBev suffered a $52m hit.

As a result, profit attributable to shareholders jumped more than 60 per cent to $2,294 for the quarter.

The Leuven-based brewer owns some of the world's biggest beer brands, such as Budweiser.

These brands have struggled in developed markets in recent years as younger drinkers in Europe and the US spurn mass-market options in favour of craft beer.

In contrast, Budweiser has powered AB Inbev's recent growth in China, where the brewer's market share grew by 100 bps to 16.7 per cent over the first quarter.

M&A rumours have swirled around the drinks industry for years, with analysts and bankers suggesting that a tie-up involving some of the big four brewers is, at some point, inevitable.

The company tempered these rumours earlier this year by launching a $1bn buy-back, which was half complete by 1 May.

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