Anheuser-Busch InBev plans overhaul in effort to raise sales

Anheuser-Busch InBev, the world’s biggest brewer, is to overhaul its sprawling company in an effort to boost sales after it reported disappointing quarterly revenue growth, especially in the US.

Despite an 8 per cent increase in half-year net profits to $3.6bn, shares in the Budweiser brewer closed 4 per cent lower in London on Thursday.

In the US — which accounts for 25 per cent of group profits — earnings before interest, tax, depreciation and amortisation fell 7.4 per cent in the three months to the end of June, worse than the 6.3 per cent fall for the half-year.

But Carlos Brito, chief executive, defended the group’s US performance. “This quarter was the best quarter we’ve had in the US in four years in terms of market share,” he said, referring to a loss of just 0.35 percentage points.

There was better news on profitability. Despite higher marketing costs because of this year’s football World Cup in Russia, ebitda margins increased 0.85 percentage points, to 39.7 per cent.

The Leuven, Belgium-based group said it expected growth to accelerate in the second half.

The reorganisation, which will take effect from January 2019, is aimed at boosting growth by cutting the number of geographic zones from nine to six — the same number as before the SABMiller acquisition two years ago — and speeding up decision-making.

Mr Brito said: “The whole idea is to organise the company for growth, to simplify it and make it more agile.”

Strategic decision-making is to tighten around an executive committee of four directors, led by Mr Brito. Two new senior jobs are being created in areas with growth potential — one of expanding the non-alcohol business and the other on the company’s own retail outlets, such as brewpubs.

None of the company’s 18 most senior executives is a woman, however, despite AB InBev’s commitment to diversity.

Mr Brito said: “We still miss women representation at this level of the company. I don’t worry about that because when I look at the ranks . . . it will be clear to everybody that women’s representation continues to increase in the levels that lead up to the senior leader level.”

He added: “We believe in meritocracy, not quotas, so we have to develop the ranks before we get somebody at the upper level.”

AB InBev has struggled as consumers in the US and Europe have moved away from mainstream lagers such as Budweiser to craft beers and Mexican imports, prompting the company to fight back by buying craft breweries.

Bright spots in the first half included Mexico, China and Brazil — although in Brazil a boost from World Cup sales was partially offset by a truckers’ strike that also affected other companies. South Africa was weak because of fierce competition.

AB InBev’s shares are down 13 per cent over the past 12 months on concerns about the US and high debt levels incurred to buy rival SABMiller in a £79bn deal two years ago. Net debt increased by $4.4bn to $108.8bn. The company explained by rise by saying the majority of its cash flow was generated in its second half, and citing adverse foreign exchange movements.

ZX Ventures, its venture capital incubator set up in 2015 to jump on new trends, will be brought under an umbrella with marketing, although AB InBev said ZX would stay independent “to remain ahead of the curve, stay agile and invest in new products and experiences”. 

Eddy Hargreaves, analyst at Investec, said the changes “look like a sensible evolution, but are unlikely to materially shift the group’s growth trajectory”.