AB InBev Withdraws 2020 Guidance On Coronavirus Disruptions
Zacks Investment Research | Mar 25, 2020 10:22PM ET
Anheuser-Busch InBev SA/NV (NYSE:BUD) is facing the heat of the novel coronavirus, which has killed thousands of people sending jitters across the global economy. To curb its spread, authorities are ordering shutdown of manufacturing facilities, implementing social distancing and travel bans. Such preventive measures have dealt a big blow to many companies, including beer makers like AB InBev.
Keeping in these lines, AB InBev withdrew its 2020 outlook due to the unprecedented impact of COVID-19. In February, when the virus was confined to China alone, management estimated core profit (EBITDA) to decrease 10% in the first quarter and 2-5% in 2020.
During its fourth-quarter earnings call, management highlighted that the coronavirus outbreak has led to a significant decline in demand across China in both on-premise and in-home channels. Further, it witnessed soft demand during the Chinese New Year, which was lower than that in the prior years, as it coincided with the coronavirus outbreak. The company stated that the outbreak has caused nearly $285 million of lost revenues and $170 million of lost EBITDA in the first two months of 2020.
Additionally, in a recent move, the company has drawn $9 billion from its revolving credit facility to bolster its cash balance. Per sources, AB InBev is already reeling under high debt levels of $95 billion due to its aggressive acquisition strategy. However, it decided to tap into the credit facility to prepare for the crisis.
In the past three months, shares of this Zacks Rank #5 (Strong Sell) company have slumped 45.2% compared with the Original post
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