Bud Brewer AB InBev Trims Dividend Amid Uncertainty
April 14 2020 - 6:56AM
Dow Jones News
By Saabira Chaudhuri
Budweiser brewer Anheuser-Busch InBev SA on Tuesday said it
would halve its final dividend for 2019 because of the uncertainty
and volatility caused by the new coronavirus.
The move comes as the world's biggest brewer contends with the
closure of restaurants and bars in many countries as the pandemic
spreads. While retail sales of alcoholic drinks have risen in the
U.S. and elsewhere lately, analysts expect the overall impact of
the virus on booze companies to be negative.
AB InBev didn't give an update on trading but analysts at
Jefferies forecast the company's organic revenue to fall 13% this
year assuming two quarters of no sales in restaurants, bars and
nightclubs globally. Even when governments lift restrictions,
analysts expect consumers to be slow to return to restaurants and
bars.
The dividend cut--to 50 European cents (54.6 U.S. cents) from
100 European cents--is AB InBev's latest move to bolster its
finances in recent weeks, having already issued new bonds and drawn
down on existing credit facilities. The lower payout to
shareholders will save about $1.1 billion, according to Societe
Generale.
While those efforts mean the company likely won't struggle with
liquidity, paying down debt--particular as earnings decline this
year--will be "a huge challenge," according to Bernstein analyst
Trevor Sterling. "In this new world, the challenge of de-levering
in 2021 and beyond could well lead to further pressure on future
dividends," he said.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
April 14, 2020 06:41 ET (10:41 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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