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AB InBev encouraged by June recovery after Africa charge

AB InBev said it was excited by the reopening of bars, but cautious given renewed restrictions in certain markets and a second ban of alcohol sales from mid-July in South Africa.

Anheuser-Busch InBev logo. Picture: AB InBev.

BRUSSELS - Anheuser-Busch InBev said it was encouraged by a global beer sales recovery in June after suffering a sharp slide in second-quarter earnings and swallowing a $2.5 billion impairment charge in Africa.

Shares in the maker of Budweiser, Corona and Stella Artois were up 6.8% at 0800 GMT, making them the strongest performer in the FTSEurofirst 300 index of leading European shares.

Traders and analysts said better-than-expected second-quarter earnings and the June pick-up were clear positives.

The brewer’s sales fell by nearly a third in April as its operations in Mexico, South Africa and Peru shut down and bars closed in most markets.

However, a significant recovery in Mexico and South Africa, year-on-year growth in Brazil and record volumes in China in June, resulted in beer sales growth of 0.7% from a year earlier.

“We came out of the quarter with reinforced confidence in the resilience of our business and the global beer category,” the company said in a statement on Thursday.

AB InBev said it was excited by the reopening of bars, but cautious given renewed restrictions in certain markets and a second ban of alcohol sales from mid-July in South Africa.

The world’s largest brewer said it had conducted a review of the impact of the pandemic on its business. It concluded it risked impairment in Africa and decided to take a $2.5 billion non-cash charge.

Africa was among the crown jewels secured in AB InBev’s near $100 billion purchase of nearest rival SABMiller in 2016, although its South African business has struggled, with margins declining by more than 6 percentage points last year.

“South Africa has been weak for a number of years, but the pandemic appears to have tipped it over the edge,” said Trevor Stirling, beverage analyst at Bernstein Securities.

The Belgium-based company said overall beer volumes had fallen by 17% and core profit by 34% to $3.41 billion on a like-for-like basis, which was better than declines of 23% and 36% in a company-compiled poll.

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