AB InBev shares rose after buyback news from the company. American depositary receipts (ADRs) of Anheuser Busch InBev (BUD) shares rose more than 5% Tuesday after announcing a stock buyback and reporting Q3 revenue results that beat forecasts. This is despite U.S. InBev sales continuing to lag after a boycott of its Bud Light brand.
The world’s largest beer brewer reported InBev Q3 fiscal 2023 profit of $0.86 per share, beating estimates, but InBev Q3 revenue gain of 5% from a year ago to $15.57 billion missed forecasts.
AB InBev shares rise
Anheuser-Busch InBev (BUD) may still be recovering from its hangover, but shares of the Bud Light parent AB InBev are up roughly 5% on Tuesday after announcing a $1 billion buyback program.
The AB InBev shares buyback will be executed over the next 12 months, and begin “almost immediately,” CFO Fernando Tennenbaum said on a call with investors.
Bank of America analyst Andrea Pistacchi said while the move is “not large,” it was “not expected.”
In addition, the company is trying to deleverage by approving a cash offer to purchase up to $3 billion worth of bonds.
InBev Q3 revenue results
However, AB InBev Q3 earnings results were mixed, as U.S. volume growth continues to drag down its performance. AB InBev U.S. revenue dropped 13.5%. This was as InBev sales to wholesalers dropped by 17.6% and InBev sales to retailers were down by 16.6%. That’s primarily due to the decline of Bud Light and a flush Q3 2022, when buyers tried to get ahead of higher prices implemented in October by purchasing early.
These InBev sales decline come seven months after a marketing campaign with transgender influencer Dylan Mulvaney sparked a widespread boycott of Bud Light. It lost its crown as America’s favorite beer to Modelo in May.
InBev sales growth
In the call with investors, CEO Michel Doukeris said Bud Light drinkers are ready to come back and take a swig once more.
Meanwhile, AB InBev also saw softness in Europe and growth in the Middle Americas, Africa, and Asia–Pacific (APAC) regions.
AB Inbev revenue increased by 5% to $15.57 billion, slightly lower than the estimates. While AB Inbev adjusted earnings per share came in at $0.86.
The total volume of InBev sold declined by 3.4% in Q3. Beer volumes dropped 4%, but non-beer volumes grew by 1.4%.
AB InBev stock is down over 5% year to date, compared to the S&P 500’s 8.5% gain.
The AB InBev earnings rundown
AB InBev Revenue: $15.57 billion versus $15.84 billion expected
Adjusted EPS: $0.86 versus $0.85 expected
Volume Growth: -3.4% versus -2.29% expected
AB InBev Price Growth: 8.40% versus 6.94%
AB InBev shares upgrade
Bank of America reiterated its recent upgrade of AB InBev shares from Neutral to Buy. Bank of America said the impact of the Bud Light boycott fallout, cost pressures, and its investments in Latin America are already baked into the AB InBev share price.
“Q3 results point that way, with better than expected margins. Margin expansion should lead to better and more consistent organic profit growth over the medium term,” Bank of America’s Pistacchi wrote in a note to clients.
The company also continues to invest in marketing, including a Bud Light partnership with the UFC that’s set to begin Jan. 1, 2024. Financial deals have not yet been disclosed, but Bud Light was UFC’s official sponsor more than 15 years ago.
AB InBev plan
AB InBev said the board has approved a $1 billion share repurchase plan over the next 12 months. In addition, the company will execute a cash tender offer for up to $3 billion of outstanding bonds as it focuses on deleveraging.
Despite Tuesday’s gains, ADRs of Anheuser Busch InBev remained in negative territory for the year to date.
