Before you read this, I suggest you take a break and enjoy this song from the 1958 film version of the 1949 Broadway hit, South Pacific.
Anheuser-Busch InBev reports what at first glance seems positive earnings. Total revenue grew 11.3% in the fiscal first half, with its global brands growing 11.3%, and total volume was up 3.4%. By any definition that’s good news. But ABI also reports “normalized EBITDA” was up 7.2%, and that’s the rub. EBITDA by definition is before interest and taxes, which are real, cash charges, and depreciation with is a non-cash bookkeeping entry. Adjust for those three minor details and it turns out that net profit falls 16.6%.
Trumpeting EBITDA when net profit under GAAP falls reminds us of that old line, “figures don’t lie buy liars figure.” Except that accounting hawks at places like the Securities & Exchange Commission won’t let a firm lie, so ABI calculates percentage changes for things like revenue and “normalized” EBITDA, but not for net profit after tax nor for earnings per share.
Still, ABI has a positive story to tell. In the second quarter, combined revenue of its global brands (Budweiser, Stella Artiois, and Corona) rose 9.7 % outside their home markets, total beer volume grew 3.4% with own-beer volume up 2.7%. The company achieved volume growth in more than 60% of its markets, Stella Artois grew 7.75 outside its home market, its above-core portfolio gew 12% in the second quarter.
In the U.S., revenue grew 2.7%, and revenue per hectoliter grew 5.5%. Sales to wholesalers were down 2.7% as sales to retailers eased 3.4%.