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Investing.com -- Anheuser-Busch InBev (EBR:ABI) shares jumped more than 8% on Wednesday following stronger-than-expected fourth-quarter earnings, marking the third consecutive year of delivering at the high end of guidance expectations.
The company reported a 10.1% increase in EBITDA for the quarter, outpacing analysts’ estimates of 7.7%.
Full-year earnings per share came in at $3.53, beating the consensus forecast of $3.34, driven by robust profit growth and favorable financial adjustments.
The world’s largest brewer benefited from solid performance across key regions, particularly in South America and EMEA, where EBITDA grew 11.3% and 16.3%, respectively.
Free cash flow also saw a notable increase, with net debt to EBITDA improving to 2.89x, better than the expected 3x.
This strengthened balance sheet allowed ABI to announce a higher-than-anticipated dividend of €1 per share.
Organic volumes declined by 1.9% in the fourth quarter, below the consensus estimate of -1.3%, but revenue still grew by 3.4%, exceeding expectations of 2.4%, reflecting price and product mix gains.
Excluding China and Argentina, full-year volumes saw a modest uptick of 0.9%, pointing to steady demand despite macroeconomic challenges. North American EBITDA growth of 2.3% underperformed the 9.9% estimate, but strong results in other regions offset this weakness.
Analysts at Jefferies and Barclays (LON:BARC) noted ABI’s improved financial position and cost control measures as key contributors to the earnings beat.
The company reaffirmed its FY25 EBITDA growth guidance of 4-8%, aligning with its mid-term outlook.
Additionally, net pension interest and accretion expenses are expected to decline to $190-220 million per quarter from the previous $220-250 million, reflecting ongoing debt reduction.
The tax rate is projected at 26-28% (below the consensus of 28%), while capex is set at $3.5-4 billion, lower than the consensus estimate of $4.5 billion. These factors could drive upgrades to FY25 free cash flow expectations.
Key highlights from the earnings release include a 150-basis-point improvement in gross margins, disciplined cost management, and a 220-basis-point expansion in normalized EBITDA margins.
In the U.S., revenue per hectoliter grew 2.5%, driven by premiumization and revenue management, with Michelob Ultra and Busch Light gaining market share.
The company also noted strong demand for Michelob Ultra Zero following its January 2025 launch.
In Latin America, Mexico saw high-single-digit revenue growth and low-single-digit volume increases, reflecting an improved consumer environment.
Brazil experienced slight organic sales growth despite a 2.8% volume decline due to adverse weather, with EBITDA growing 8% and margins expanding by 240 basis points.
Europe’s Q4 revenue declined slightly, with mid-single-digit volume declines, but EBITDA grew by approximately 20%, supported by margin recovery and continued premiumization, with premium+ brands accounting for 57% of full-year revenue.
China remained a weak spot in the Asia-Pacific region, with organic sales growth down 20.1% and volumes declining 19%, impacted by inventory management and continued on-premise challenges. However, cost efficiencies helped offset some of the topline weakness.
Despite challenges in some markets, Anheuser-Busch InBev’s valuation remains attractive, trading at a price-to-earnings ratio of 12.7x for 2026, compared to the staples sector average of 16.7x.