World's largest brewer AB InBev scraps shareholder payout amid pandemic uncertainty despite sales growth
AB InBev scrapped its interim dividend amid pandemic uncertainty on Thursday, despite reporting a rise in global third-quarter beer sales.
The world's largest brewer - maker of Budweiser, Stella Artois and Corona lagers - beat analyst expectations to see a 4% growth in revenues in the three months to September, calculated on an organic basis.
The company reported normalised profit of $1.6bn for the quarter, down 34.5% on the same period in 2019.
Chief executive, Carlos Brito, said: “Our third-quarter results reflect our fundamental strengths as the world’s leading brewer and the resilience of the global beer category."
The company cited "uncertainty and volatility" caused by the pandemic as its reason for not paying an interim dividend this year.
AB InBev, which did a mega-takeover of rival SABMiller in 2016 and saw its debt rise to $87.4 billion in June, said in its third quarter trading statement that it is prioritising "deleveraging commitments”.
The company said: "While our business is delivering improving results, we continue to face uncertainty and volatility arising from the COVID-19 pandemic.
"In that context, our Board determined that it would be prudent and in the best interest of the Company to forgo the interim 2020 dividend payment.
"This decision is consistent with our financial discipline and prioritizes our deleveraging commitments, which have been impacted by the COVID-19 pandemic."
It added: “While we expect our performance in the second half of this year to be better than the first, the environment remains volatile and uncertain, especially as some governments are renewing restrictions.”
AB InBev shares rose by 124 cents to 4650 cents, or 2.7%, following the announcement on Thursday morning.
Paula Lindenberg, president of Budweiser in the UK and Ireland, said that the brand had seen trade grow in both "value and volume" in the quarter, boosted by supermarket sales and the gradual reopening of pubs, restaurants and bars after 4th July.
She said that Budweiser, Stella Artois and Corona combined market penetration rose by 40% in the period.
She that this "represents almost an additional two million households entering the category and choosing our portfolio of brands to enjoy in new occasions" and said the company is "confident this will lead to continued growth" in future.
It comes after fellow brewing giants Heineken and Carlsberg also reported rises in their beer sales over summer.
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