Anheuser-Busch InBev, in a recently released press release, has updated on its business, in light of the global Covi-d19 pandemic. The observations given are based on organic growth figures and refer to 1Q20 versus the same period of last year.
The Covid-19 pandemic presents unprecedented challenges for societies, governments and businesses across the world.
The health and safety of our colleagues continues to be our first priority and we are doing our part globally to help our communities, support our partners and connect with our consumers in new ways.
Our business started the year with good momentum and delivered volume growth of 1.9 per cent in the first two months of the year excluding China, where the Covid-19 outbreak began in late January.
The impact of Covid-19 on our global results increased significantly toward the end of the quarter. Consequently, in 1Q20 our total volume declined by 9.3 per cent and by 3.6 per cent excluding China. Revenue declined by 5.8 per cent while revenue per hl grew by 3.9 per cent. EBITDA of 3 949 million US$ represents a decline of 13.7 per cent, with margin contraction of 331 bps to 35.9 per cent.
We expect that the impact on our 2Q20 results will be materially worse than in 1Q20. This has already become evident in our April 2020 global volumes, which declined by approximately 32 per cent, primarily driven by the closure of the on premise channel in most markets and government restrictions imposed on certain operations of ours in connection with the Covid-19 pandemic.
Our diverse geographic footprint allows us to apply best practices from our experiences in China and South Korea to the rest of our markets, as they move through different stages of the crisis and into eventual recovery. For context, in China, our volumes declined by approximately 17 per cent in April, an improvement from the 1Q20 decline of 46.5 per cent.
We have been investing in new capabilities for several years to better connect with our customers and consumers by leveraging technology, such as B2B sales and e-commerce platforms, which provide us with a structural advantage in these unique circumstances.
We have exercised prudent financial discipline with several proactive measures, including optimising our cost base, revising our final 2019 dividend proposal and maintaining a strong liquidity position.
Key Figures
Revenue: Revenue declined by 5.8 per cent, materially impacted by lower volumes resulting from the Covid-19 pandemic. Revenue per hl grew by 3.9 per cent, driven by ongoing premiumisation and revenue management initiatives.
Volume: Total volumes declined by 9.3 per cent, with own beer volumes down 10.5 per cent and non-beer volumes down 0.2 per cent. Excluding China, our volumes declined by 3.6 per cent in 1Q20 despite initial growth of 1.9 per cent in January and February.
Global Brands: Combined revenues of our three global brands, Budweiser, Stella Artois and Corona, declined by 11.0 per cent globally and by 17.5 per cent outside of their respective home markets.
Growth: Growth across the majority of our markets was more than offset by declines in China, which is the largest market for both Budweiser and Corona outside of their respective home markets.
Cost of Sales (CoS): CoS was flat in 1Q20 and increased by 10.3 per cent on a per hl basis, driven primarily by operational deleverage resulting from the impact of Covid-19 on our volumes and transactional currency headwinds.
EBITDA: EBITDA of 3 949 million US$ represents a decrease of 13.7 per cent in the quarter, with EBITDA margin contraction of 331 bps to 35.9 per cent.
Net finance results: Net finance costs (excluding non-recurring net finance results) were 3 160 million US$ in 1Q20 compared to 366 million US$ in 1Q19.
The increase was predominantly due to a mark to-market loss of 1 855 million US$ in 1Q20 linked to the hedging of our share-based payment programmes, compared to a gain of 951 million US$ in 1Q19, resulting in a swing of 2 806 million US$.
Income Taxes: Normalised effective tax rate (ETR) decreased to -109.3 per cent in 1Q20 from 19.6 per cent in 1Q19, impacted by non-deductible mark-to-market losses linked to the hedging of our share-based payment programmes.
Excluding the mark-to-market impact linked to the hedging of our share-based payment programmes, our normalised ETR was 25.9 per cent in 1Q20 as compared to 27.5 per cent in 1Q19.
Profit: Normalised profit attributable to equity holders of AB InBev was -845 million US$ in 1Q20 versus
2 395 million US$ in 1Q19.
Underlying profit (normalised profit attributable to equity holders of AB InBev excluding mark-to-market losses linked to the hedging of our share-based payment programmes and the impact of hyperinflation) was 1 015 million US$ in 1Q20 as compared to 1 449 million US$ in 1Q19.
Earnings per share (EPS): Normalised EPS in 1Q20 was -0.42 US$, a decrease from 1.21 US$ in 1Q19, negatively impacted by a lower profit and mark-to-market losses linked to the hedging of our share-based payment programmes. Underlying EPS (normalised EPS excluding mark-to-market losses linked to the hedging of our share-based payment programmes and the impact of hyperinflation) was 0.51 US$ in 1Q20, a decrease from 0.73 US$ in 1Q19.