BRUSSELS: The world’s top brewer AB InBev on Friday said its earnings took a hit in the second quarter on tough results in Latin America ahead of the Olympics in Rio.
The Belgian-based Budweiser maker is in the throes of a blockbuster merger with rival SABMiller, a tie-up process that also affected earnings negatively, the company said.
Operating profit increased by 4.3 percent from a year prior in the second quarter to $4.01 billion, but this missed analyst expectations for the second quarter running, according to Bloomberg.
Total sales volumes fell by 1.7 per cent for the April to June period, dented by the bad performance in key market Brazil, where business is suffering due to a slumping economy, political uncertainty and the Zika virus outbreak.
Ab InBev also took a massive charge in connection with the SABMiller merger, as it booked $1.77 billion to hedge against foreign exchange volatility that intensified in the runup to the British Brexit referendum in late June.
This hurt the company’s net profit sharply, with shareholders left only $152 million for the period, down from $1.93 billion a year earlier.
AB InBev agreed in November to buy SABMiller, whose brands include Foster’s, Grolsch and Peroni.
But angry shareholders of London-based SABMiller are increasingly wary of the giant buyout, which before the Brexit vote was valued as much as $121 billion.
AB InBev this week raised its offer on the deal, which has overcome major regulatory hurdles in Europe and the US.
If completed, the deal is expected to mainly boost the company’s prospects in expansion markets such as Africa and China as sales stagnate in the rest of the world.