The world's largest brewer Anheuser-Busch InBev saw fourth-quarter net profit fall by 24 percent largely on lower asset sales, but investors were cheered to hear that the dividend was more than doubled and that growth in Brazil and Asia was compensating for a more subdued performance in the U.S. and Europe.
The brewer of beers like Budweiser and Stella Artois reported Thursday that its net profit fell to $968 million from $1.28 billion a year earlier. The decline, largely due to higher taxes, masked the fact that the company's revenues rose to $9.47 billion from $9.30 billion, despite a modest decline in sales volumes.
Though the company's full-year net profit dropped to $4.03 billion from euro4.61 billion, it more than doubled its annual dividend to 80 cents from 38 cents in 2009 as its has to repay less debt this year.
The reaction in the markets was positive, and the company's share price in Brussels was up 3.2 percent at euro41.45.
"It's really a good result," said Gerard Rijk, a food and beverages analyst at ING in the Netherlands. He was particularly surprised about the higher dividend payout.
A more detailed look at the figures shows that when stripping out the effect of asset sales and other one-off items, beer volumes were up in the fourth quarter, after fast growth in Latin America and the Asian Pacific region made up for falling volumes in the U.S. and Western Europe.
"Our financial performance in the quarter was very strong," said AB InBev's Chief Financial Officer Felipe Dutra.
Earnings before interest, taxes, depreciation and amortization _ or Ebitda _ were up 22 percent in the fourth quarter, thanks to price increases in Brazil and generally higher average revenues.
Dutra drew special attention to the company's famous U.S. brand Budweiser, which grew in volume by 1.7 percent globally last year _ the first global increase in two decades.
The company has been working hard to establish Budweiser as a global brand, as it loses its shine in the U.S.
That strategy was particularly successful in the U.K., where Bud sales jumped 36 percent last year as the beer benefited from its sponsorship of the FIFA World Cup in South Africa.
In the second half of this year, AB InBev plans to launch Budweiser in Brazil, its second biggest market. Bud was available in Brazil in the late 1990s, thanks to a distribution agreement with another brewer, but since then has only been sold in Wal-Mart stores.
"We are ready for the launch," said Dutra, pointing to the successful rollout of the brand in Russia last year.
In the U.S., where Bud sales have been in decline, AB InBev has been trying to get consumers to trade up to its "premium" brands, by lowering the difference in price between premium and sub-premium beers. That gap, traditionally above 25 percent, is now only at about 15 percent, Dutra said.
On top of that, it is betting on new product launches, including Budweiser Lime in China, Stella Artois Black in the U.K. and Skol 360 and Antarctica Sub Zero in Brazil.
AB InBev said it expects beer volumes to remain "soft" in the first quarter, amid continued high unemployment in the U.S., its biggest market, and heavy rains in Brazil. Together, the U.S. and Brazil are responsible for about 70 percent of the brewer's results.
The recovery should gain momentum in the second quarter, AB InBev said, pointing to early signs of falling unemployment in the U.S.
"We believe economic recovery in the U.S. is a question of when, not if," Dutra said, adding that improved consumer confidence should boost beer sales.
AB InBev has been moving its focus to the fast growing Asian-Pacific and Latin American markets, while pulling marketing money out of the U.S., Rijk said.
AB InBev was created in 2008 when Belgium's InBev bought U.S. brewer Anheuser-Busch.