The world's biggest brewer Anheuser-Busch InBev has lowered annual profit forecasts after a weak third quarter dragged down by higher commodity costs, marketing costs in China, and price rises in South Korea and Brazil.
Shares fell 10 per cent in morning trading on Friday, making it the fourth-worst performer in the Stoxx 600 index.
The maker of Stella Artois and Budweiser reported lower than expected sales and profit for the quarter, prompting it to scale back its annual target for earnings growth, before interest, tax, depreciation and amortisation, saying it would be "moderate" instead of the previous "strong".
Felipe Dutra, chief financial officer, said: "Overall the third quarter was challenging due to some material headwinds that were flagged in the second quarter. Nevertheless we are not satisfied with the results."
The miss was a sharp turn for the worse for the Belgium-listed company, which had been riding high after a strong second quarter when its beer sales rose at their fastest pace in more than five years.
It also recently completed two asset disposals aimed at reducing its $104bn debt load racked up from the 2016 acquisition of SABMiller, prompting a rally in its shares over the summer. AB InBev listed a minority stake in its Asia business and sold its Australian operation to Japan's Asahi to raise about $16.6bn in cash.
But that progress ground to a halt in the third quarter. Revenue came in at $13.2bn, below analysts' expectations of $13.4bn, according to company-compiled consensus. Organic sales growth, a key industry metric that strips out the effect of acquisitions and disposals, stood at 2.7 per cent versus consensus of 4.7 per cent. Earnings per share were $1.51, compared with expectations for $1.27.
In the US, its biggest market, market share losses for mainstream beers Bud Light and Budweiser accelerated, while in Brazil, its second-biggest market, an ongoing economic downturn and a price rise hurt sales.
"It is night and day from last quarter," said Ed Mundy, analyst at Jefferies. "Growth in the second quarter was arguably overinflated through advanced shipments in China and Australia, and now they are seeing the reversal of this."
The group's Asian unit, Budweiser APAC, also published its maiden results on Friday, which showed sales in the all-important China market "declined slightly" as volumes fell 6 per cent year-on-year, partly due to weakness in sales to bars. A price rise in South Korea, which dented demand there, will be reversed, the company said. Shares in the local business closed 2.6 per cent lower in Hong Kong.
Shares in AB InBev are trading at roughly a 12 per cent discount to smaller rival Heineken, based on a forward price-to-earnings multiple, according to S&P Capital IQ. Before Friday's results, the shares were up 31 per cent this year, compared with a 22 per cent rise for Heineken.
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