AB InBev suffers weak start to year after Brazil slump

AB InBev faces stiff competition from craft beer: Mintel

Anheuser-Busch InBev (Ab InBev), the world's top brewer set to buy number two SABMiller, reported lower than expected earnings in the first three months after one of its most challenging quarters in crisis-hit Brazil in years.

The brewer of Budweiser, Stella Artois and Corona had already cautioned in February that it was likely to have a weak start to the year in Latin America's biggest economy. Its beer volumes fell by 10 percent.

Brazil, where AB InBev has two-thirds of the beer market, contracted at its sharpest rate since 1990 last year and the outlook for 2016 is nearly as bad with a political crisis now adding to its problems.

AB InBev's first-quarter core profit (EBITDA) rose by 2.5 percent excluding the impact of currencies and one-offs to $3.46 billion, compared with the average forecast in a Reuters poll of $3.73 billion.

One of the brewing facilities at Anheuser-Busch.
Source: Anheuser-Busch

The brewer has succeeded in pushing through price hikes, but has been hit by the weakness of currencies, notably the Brazilian real and the Mexican peso, to the dollar, although Mexico was the star performer with 13 percent more beer sold.

Overall, the company retained its forecast that revenue per liter would grow, with strong volume increases in Mexico, an improvement in the United States, a rise in revenue in Brazil and pressure in China.

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China's manufacturing sector expanded for a second month in a row in April but only marginally, raising doubts about a recent pick-up in the world's second-largest economy.

AB InBev gave no new information on its planned $100-billion-plus takeover of nearest rival SABMiller, saying it still expected the deal offering new markets in Africa and Latin America to close in the second half of this year.

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