AB InBev market value tumbles as it halves dividend to pay for SABMiller hangover

AB InBev’s shares fell 11% this morning after the Belgian brewing giant halved its dividend in an effort to pay off the debt from its SABMiller acquisition.

The clearout came as AB InBev announced it would cut its earnings per share, for the first time in three years, down to €1.80 (£1.59), saving the company around $4 billion which will be used to pay off some of the $108 billion debt.

AB InBev closed its $79 billion deal to acquire SABMiller in October 2016, having sold off a number brands on both sides in Asia and Europe to appease competition regulators.

Sales per hectolitre rose by 4.5% between January and September this year, against a weak rise in beer volumes. Own beer volumes were up 0.6%, while non-beer volumes fell 3.1%, equating to a 0.3% rise across the company’s portfolio, which includes brand like Budweiser, Leffe, Corona and Becks.

Its European businesses, much like Heineken’s, benefited from both the World Cup and unusually warm temperatures over the summer.

“Budweiser lit up the globe’s biggest sporting event with our most ambitious campaign to date,” Jason Warner, AB InBev’s north Europe president, said in an emailed statement.

“Corona has also had a fantastic summer, achieving double-digit growth as it toured the country with its sunset sessions and solar-powered DJ booths in the on-trade and ran a hugely popular promotion to win a Corona-branded cooler in the off-trade.”

Analysts at Liberum called the figures a “big miss” for AB InBev, as “in every region, both volumes and sales missed expectations.”

“The bright spots were China, Mexico, Western Europe and many African markets while Brazil, Argentina and South Africa faced difficulty.”

However, it added shareholders needn’t be concerned yet, as the company’s solid infrastructure means depressed shares should be looked at as an opportunity rather than a threat.

The financial firm pointed to AB InBev’s “enviable” distribution network and focus on low-cost products, while the company’s “ownership mindset…enables the group to take a long-term view.”