(Bloomberg) -- Anheuser-Busch InBev NV Chief Executive Officer Carlos Brito will miss out on a bonus for the first time since 2008 after earnings at the Budweiser maker missed analysts' estimates for a seventh straight quarter.
Chief Financial Officer Felipe Dutra will also get nothing from the bonus pool, the Leuven, Belgium-based company said Thursday as it announced an increase to its cost-saving target that left some analysts disappointed. The stock fell as much as 3.3 percent in Brussels.
Fourth-quarter results missed estimates at almost all levels as the brewer continues to struggle with a slump in its key market of Brazil. The figures provide a reminder of why it paid $103 billion for main rival SABMiller. AB InBev on Thursday raised its target for savings from the acquisition by $350 million to $2.8 billion within three to four years, although some analysts had expected an increase of $600 million.
It's “another shocker, but that's the trough,” wrote Eamonn Ferry, an analyst at Exane BNP Paribas. “We had feared the worst this quarter, and so it is. There may well be an element of kitchen-sinking here.”
Adjusted fourth-quarter earnings before interest, tax, depreciation and amortization fell to $5.25 billion, the brewer said in a statement. Analysts expected $5.64 billion. AB InBev also said it expects to incur costs of $900 million over three years to achieve the savings goals.
For a Bloomberg Intelligence dashboard on AB InBev's performance, click here.
Brito pledged for a better performance in 2017 as revenue growth accelerates.
“If you own a bakery and don't make any money one year, you don't get a bonus -- this is the same thing,” he said at a press conference in Leuven. “After a bad year, that's when you see leaders rising to the occasion.”
Spending power in Brazil, AB InBev's largest market after the U.S., is nosediving amid record rates of unemployment, bedeviling consumer-goods makers including Nestle SA and Unilever. Lower shipments and a decline in AB InBev's market share led to a 33 percent drop in earnings in that country.
“Brazil is probably one of the most competitive markets we operate in,” Dutra said on a call with reporters.
Incomes in the country should rise in 2017, which will be positive for beer consumption, the CFO said. Still, the brewer forecast headwinds from Brazil's weak currency to weigh on first-half results.
AB InBev's Brazilian roots run deep. Rio de Janeiro-born Brito became CEO of AmBev, the local brewer of Antarctica and Brahma, in 2004 and in the following years merged it with Belgium's Interbrew and took over Anheuser-Busch. More than half of the brewer's top managers are Brazilian and AB InBev's top shareholders include Jorge Paulo Lemann, a Brazilian investor involved in Kraft Heinz Co.'s unsuccessful takeover approach for Unilever.
Rival Heineken NV agreed to buy Kirin Holdings Co.'s unprofitable beer business in Brazil last month for about $700 million, adding an extra 12 percent share of that market.
The maker of Stella Artois maintained its final dividend at 2 euros a share and warned that growth in such payments will be modest as it reins in its $108 billion debt. CFO Dutra said AB InBev aims for net debt of about about 2 times Ebitda within a few years. That ratio almost doubled to 5.5 times last year.
Among other highlights:
- Brewer to cut capex to about $3.7 billion this year after spending $4.8 billion in 2016
- CEO says Brazilian market share should rebound 67% to 69% in near-term after dropping to 66% last year
- Cost of sales per hectoliter forecast to increase by low single digits on constant geographic basis
- $168 million of the $900 million one-time costs have been incurred already
To contact the reporter on this story: Thomas Buckley in London at tbuckley25@bloomberg.net.
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier, Paul Jarvis
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