Anheuser-Busch InBev (OUTBREAK) may still be recovering from its hangover, but shares of parent Bud Light rose about 5% on Tuesday after announcing a $1 billion buyback program.
The buyback will run over the next 12 months and will begin “almost immediately,” Chief Financial Officer Fernando Tennenbaum said on a call with investors.
Andrea Pistacchi, an analyst at Bank of America, said that while the move is “not big,” it was “not expected.”
Additionally, the company is attempting to deleverage by approving a cash offer to purchase bonds worth up to $3 billion.
However, third-quarter earnings results were mixed as volume growth in the US continues to weigh on its performance. Its U.S. revenue fell 13.5% as sales to wholesalers fell 17.6% and sales to retailers fell 16.6%. This is mainly due to the decline of Bud Light and the successful third quarter of 2022, when buyers tried to get ahead of the higher prices implemented in October by purchasing early.
These figures 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.
On the call with investors, CEO Michel Doukeris said Bud Light drinkers are ready to come back and have a drink once again.
Meanwhile, AB InBev also experienced weakness in Europe and growth in the Central America, Africa and Asia-Pacific (APAC) regions.
Revenue rose 5% to $15.57 billion, slightly below Bloomberg estimates, while adjusted earnings per share were $0.86.
Total volume sold decreased 3.4% in the third quarter. Beer volumes fell 4%, but non-beer volumes grew 1.4%.
AB InBev shares are down more than 5% so far this year, compared with the S&P 500’s gain of 8.5%.
The earnings summary
Revenue: $15.57 billion vs. $15.84 billion expected
Adjusted EPS: $0.86 vs. $0.85 expected
Volume growth: -3.4% compared to -2.29% expected
Price growth: 8.40% versus 6.94%
Bank of America reiterated its recent upgrade of AB InBev shares from Neutral to Buy, saying the impact of the Bud Light boycott, cost pressures and its investments in Latin America are already built into the share price.
“Third-quarter results point in that direction, with better-than-expected margins. Margin expansion should lead to better and more consistent organic earnings growth over the medium term,” Bank of America’s Pistacchi wrote in a note. note to customers.
The company also continues to invest in marketing, including a Bud Light partnership with the UFC that will begin on January 1, 2024. Financial agreements have not yet been revealed, but Bud Light was the official sponsor of the UFC more than 15 years ago.
“They’re trying to find new people and I think the UFC gives them the opportunity to do that,” said Anjali Bal, associate professor of marketing at Babson College. The company will not give up the Bud franchise, she added.
“I couldn’t be more excited to join or rejoin the UFC on this return and have Bud Light in the US for fans and Budweiser activated globally,” Doukeris said on the call.
—
Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke DiPalma or email him at bdipalma@yahoofinance.com.
Click here for the latest stock market news and in-depth analysis, including the events moving stocks.
Read the latest financial and business news from Yahoo Finance
