AB InBev takes $2.5bn write-down in Africa, as Covid-19 impacts Q2

AB InBev took a $2.5 billion write-down in the value of its African operations due to market risks, as the company’s Q2 earnings were significantly impacted by the Covid-19 pandemic.

The owner of major beer brands including Budweiser, Stella Artois and Beck’s reported falling beer sales throughout April and May, with volume sales declining 32.4% and 21.4% respectively; though the company did experience a sales recovery in June, as volumes grew by 0.7%.

AB InBev’s year-on-year Q2 revenue declined by 17.7% to $10.2 billion, with a revenue per hl decline of 0.6%, driven by restrictions related to the Covid-19 pandemic. For the first half of the year, revenue declined by 12% to $21.2 billion, though revenue per hl did actually increase by 1.6%.

The $2.5 billion impairment charge followed an internal review of the impact of Covid-19 on its business. AB InBev concluded that, under a worst-case scenario, the value of its operations in the company’s African units would be valued less than their previous book value following the firm’s acquisition of SAB Miller in 2016, and so the company opted to write-down the value of these operations.

Global pre-tax earnings fell 34.1% in the quarter to $3.41 billion, while earnings for the first half of the year declined by 24.7% to $7.36 billion.

The company stated that the re-opening of bars and the on-trade in European markets served to boost sales volumes towards the end of the quarter, while ecommerce and beer sales from direct-to-consumer platforms increased during the quarter.

Jason Warner, Europe president at AB InBev, said: “As restrictions began to ease in many European markets towards the end of the second quarter, our support for our customers in the on-premise channel evolved towards a successful re-opening.

“We continue to see strong growth in the e-commerce channel, both through our direct-to-consumer platforms and our partnerships with major global online retailers. Our owned e-commerce beer store portfolio in Europe more than doubled compared to the prior year, with our consistent focus and investment in this area providing us with a structural advantage to lead online beer sales.”