AB InBev beats profit forecasts on margin gains, unveils $6 bln buyback

Anheuser-Busch InBev (ABI) reported stronger-than-expected third-quarter earnings, with normalized EBITDA rising 3.3% to $5.59 billion and underlying EPS up 1% to $0.99, both surpassing consensus estimates, primarily driven by an 85 basis point margin expansion despite a 3.7% decline in sales volumes and slightly missed revenue. The brewer also announced a larger-than-anticipated $6 billion share buyback program, a $2 billion bond redemption, and an interim dividend, while maintaining its 2025 organic EBITDA growth guidance of 4% to 8%, signaling confidence in future profitability despite top-line challenges.

Analysis

Anheuser-Busch InBev (ABI) reported stronger-than-expected third-quarter earnings, with normalized EBITDA rising 3.3% to $5.59 billion and underlying EPS increasing 1% to $0.99, both surpassing consensus estimates. This bottom-line beat was primarily driven by an 85 basis point margin expansion to 37%, effectively offsetting a 3.7% decline in sales volumes and a slight revenue miss at $15.13 billion. CEO Michel Doukeris highlighted the momentum of megabrands and innovation in navigating a dynamic consumer environment.

The company announced a substantial $6 billion share buyback, exceeding the $4.6 billion consensus, to be completed within 24 months, alongside a $2 billion bond redemption and an interim dividend of €0.15 per share for 2025. Jefferies analysts noted a "bottom line beat" due to margin expansion and cost control, suggesting the EBITDA performance provides confidence for the fiscal year 2025 delivery despite the topline being below consensus.

Underlying operational strength was evident in a 4.8% growth in revenue per hectoliter, with global megabrands growing 3%, and significant increases in no-alcohol beer and Beyond Beer segments, both up 27%. The BEES Marketplace also saw a 66% increase in gross merchandise value to $935 million, indicating digital channel success. Despite mixed regional performance, including a 15.2% revenue drop in China, ABI maintained its 2025 guidance for organic EBITDA growth between 4% and 8%, signaling confidence in future profitability.

Key Decisions for Investors

• Investors should consider the implications of ABI's robust capital return program, including the larger-than-expected $6 billion share buyback, which signals management's confidence and commitment to shareholder value.
• Monitor the sustainability of margin expansion and cost control efforts, as these are currently offsetting persistent volume declines in key markets like China and Europe.
• Evaluate the growth trajectory of ABI's strategic initiatives, such as its global megabrands, no-alcohol and Beyond Beer segments, and the BEES digital platform, for their long-term contribution to revenue diversification and growth.