Anheuser-Busch | Slowing pains
Over the past decade, Anheuser-Busch InBev (ABI) has made c. USD180bn worth of acquisitions with cheap debt (c.4% average interest rate). Thereafter, the Group implemented an aggressive strategy of cost optimisation, which reduced operating costs per hectolitre by 13% to USD21/hl (USD.27/hl peer group average). Through its aggressive strategy, ABI has increased underlying earnings from USD2.90/share to USD4.38/share in a market that is slowing down and becoming increasingly fragmented. We do not believe further acquisitions will be part of the Group's growth strategy. We forecast earnings to improve primarily due to the deleveraging of the balance sheet. At 12.7x forward EV/EBITDA, we believe ABI is fairly valued and is operating in a mature industry.Anheuser-Busch Inbev is engaged in the brewing of beer. Co. manages a portfolio of well over 200 brands that includes brands such as Budweiser, Stella Artois and Beck's; multi-country brands such as Leffe and Hoegaarden; and other brands such as Bud Light, Skol, Brahma, Quilmes, Michelob, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske and Jupiler. Co. also produces and distributes soft drinks, particularly in Latin America. Co.'s operations are organized along seven business segments: North America, Mexico, Latin America North, Latin America South, Europe, Asia Pacific and Global Export & Holding Companies.
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