Third quarter revenue saw organic growth of 12.1%, to $15.1bn. Revenue per hectolitre was up 8.0% as premiumization trends continued across most markets. Volumes grew 3.7%, with beer volumes up by 3.4% and non-beer volumes up by 5.2%.
Underlying cash profit (EBITDA) rose 6.5% to $5.3bn, lagging top line growth as higher costs pushed margins lower.
Both revenue and profit figures were ahead of analyst expectations.
Full year cash profit's expected to grow between 6-8%, an improvement on previous guidance of 4-8%, with revenue growing at a faster pace.
The shares rose 4.6% following the announcement.
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Our View
Markets reacted well to third quarter results, which beat analyst estimates on the top and bottom line. The story remains largely unchanged, prices are being pushed higher to try and offset rising input costs. Crucially though, the beverage industry looks to be holding firm in the face of consumers with less cash to spare. Volumes for both beer and non-beer categories have been continuing to rise over the year.
Speaking of costs, margins continue to feel the effects of higher commodity prices. That's keeping a lid on how much of the revenue increase feeds through to the profit line. If inflation calms over the next year, that trend should start to look more favourable - of course the opposite is also true.
Looking past some of the noise, in developed markets a trend towards more premium products presents the opportunity to boost both margins and revenues. That's played into the group's hands as strong brands like Michelob Ultra, Stella and Corona have reaped the rewards of the shift.
Footholds in less-developed markets from Latin America to Sub-Saharan Africa mean there's scope for huge volume growth in the years ahead. We're already starting to see this in action, and it looks like premiumisation is a trend that's making its way into these regions too. Growth in Mexico, Brazil and Columbia was driven by more expensive brands.
Our biggest bugbear is the balance sheet, which is carrying too much debt. Net debt's almost 4 times cash profit, a long way from the company's target of 2 times. That figure will come down on its own if profit recovers, but the absolute debt level could do with more work.
There's no immediate concern, over 70% of the debt doesn't need repaying for 5 years or more and interest payments are very manageable. Nonetheless, we're keen ABI keeps its foot on the pedal where debt reduction's concerned.
AB InBev's enviable portfolio of brands and huge global footprint means revenues should be robust in most conditions. Its long-term growth opportunities shouldn't be dismissed either. But it's hard to get too excited when reducing debt, rather than reinvesting or returning to shareholders, is likely to be a priority for years to come.
AB InBev key facts
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