AB InBev shares tank on news of dividend cut

ANHEUSER-Busch InBev (AB InBev) plummeted 10.3 percent on the JSE yesterday as the world’s largest brewer halved its dividend payout to pave the way for paying its $109 billion (R1.56 trillion) debt following its acquisition of SABMiller in 2016.

AB InBev, which boasts more than 200 brands, including Budweiser, blamed volatility in emerging market currencies for the decision to rebase its dividend.

The stock changed hands for R1 076.55 a share at 1pm after the Belgian-based company said it would pay shareholders an interim of €0.80 (R13.13) a share and proposed a final dividend of €1 a share in 2018.

Last year the brewer paid a total dividend of US3.60 cents (R8.62) a share, comprising an interim dividend of €1.60 a share and final dividend of €2.

It was described as generous to its shareholders in terms of paying dividends in the global food and beverage sector.

However, the acquisition of SABMiller, which was billed to provide AB InBev with its first foothold in Africa, left the company with huge debt.

Early this month Moody’s Investors Service placed the company’s debt rating on review for a possible downgrade. The fall in emerging-market currencies also has sent its share price lower.

“We are rebasing our dividend payout to accelerate deleveraging toward our optimal capital structure of around a 2 x net debt to earnings before interest, tax, depreciation and amortisation ratio while continuing to prioritise investment in organic growth opportunities and creating greater financial flexibility,” the company said.

The group said capital allocation would be prioritised with plans to invest cash in its brands. It expected strong revenue in 2018, driven by the solid performance of its brand portfolio, adding that revenue had grown by 4.5 percent in the third quarter, driven by beer volume growth of 0.5 percent.

It said that a diverse group of markets contributed to this growth, including China, Mexico, Western Europe and many of its African markets.

“At the same time, we faced macro-economic challenges in relevant markets such as Brazil, Argentina and South Africa,” the group said.

AB Inbev closed 10.59 percent lower at R1 073 on the JSE yesterday.

| MIKE HUTCHINGS Reuters A WOMAN serves a one-litre bottle of AB Inbev’s Carling Black Label beer at a bar in Cape Town. The company’s shares took a knock yesterday after it announced a 50% cut in its dividend payout.