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The name "Dutch Trader" refers to The Golden Age. This was a period in Dutch history, roughly spanning the 17th century, in which Dutch trade, science, military and art were among the most acclaimed in the world. Dutch ships hunted whales off Svalbard, traded spices in India and... More
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  • Anheuser Busch Inbev, Disappoints 0 comments
    Jul 31, 2012 9:10 AM | about stocks: BUD

    As mentioned in my short idea and article of July 2 Anheuser Busch Inbev A Great Company For The Long Run the brewer (NYSE:BUD) came with disappointing numbers.

    Second quarter EPS grew 22% year-over-year to $1.22, clearly above consensus estimates of $1.09, on a lower-than-anticipated tax rate (12.6% vs. expected 20.6%). The beat at the EPS level is the brightest spot. Other figures came in almost entirely below expectations:

    Sales -0.8% to $9.87 billion (est. $9.94 billion), normalized EBITDA -4.1% to $3.59 billion (est. $3.74 billion) and margin -80 basis points to 36.4% (est. 37.6%).

    On an organic basis, sales +4.7% (est. +5.5%) with volume -0.1% (est. +1.3%) and EBITDA +2.5% (est. +6.2%).

    Asia Pacific (organic sales +19.3% and EBITDA margin +120 basis points to 15.2%) was the only region beating estimates. North America posted organic sales growth of 2.3% (est. +2.3%), but EBITDA declined 1.2% (est. +3.5%) and margin was down 140 basis points to 41.9% (est. 43.9%). Organic volume dropped 1.8% (est. -1.0%) with sales-to-wholesalers (STWs) -2.1% and sales-to-retailers -0.2%. The hot weather in the US seems not to have boosted sales. In Brazil, organic volume growth was 2.3%, lagging sector development of 3.1%, which led to a share decline of 20 basis points to 68.8% in Q2.

    Outlook

    The company reiterated FY12 guidance, including price increase ahead of inflation, mid single-digit input costs inflation, good momentum in its US beer business, positive volume growth in Brazilian beer operations, a slightly lower tax rate, and net debt/EBITDA below 2x before M&A activity (e.g. Modelo) this year and below 2x including M&A by 2014.

    Final Note

    Anheuser Busch Inbev's Q2 results disappointed. Especially the margin development was a negative surprise. Volume trends in its biggest markets, the US and Brazil, were rather sluggish. Although outlook was confirmed, the relatively weak Q2 figures should put the stock under profit-taking pressure, after its very strong run in the recent two months. A buy under $70, but for now a shorting candidate.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: short-ideas Stocks: BUD
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