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AB InBev SA/NV FY'23 Earnings - Volume slump, higher costs drag full-year performance

Volume decline drags revenue performance 
AB InBev’s revenue for the Q4 period fell marginally (-1% y/y) to $14.5 billion. This came as price increase was unable to mask the effect of volume decline. While price increase sent revenue per hl higher by 9.3% y/y, the elastic nature of consumer demand for AB-InBev’s product, caused volumes to dip by 2.6% y/y as consumers reacted to this price increase. Thus, revenue for the period came in lower.

Finance costs take its toll
For the company’s operating results, we saw OPEX jump by 4% y/y to $3.2 billion in Q4’23. Thus, a combination of lower gross margin and higher OPEX drove EBIT for the Q4 period 15% lower y/y to $16.5 billion.
Going further down, Q4'23 witnessed a notable 3.5x y/y surge in net finance expenses, reaching $1.4 billion. This drove the company to report a significant 20% y/y drop in profit before tax (PBT) to $2.6 billion, and a 31% y/y decrease in profit after tax (PAT), to come in at $2.3 billion. "                        

Outlook
While we acknowledge a slowdown of growth in its primary market (North America), we also note that new growth in other markets as well as its digital channels will propel AB InBev’s future. Thus, for FY’24 revenue and profit after tax, we project $64.5 billion (+9% y/y) and $6.9 billion (+0.4% y/y) respectively. Hence, we value a unit of the stock at ZAR 1,251.04 and rate it a HOLD."