AB InBev, Pernod cut outlooks as pandemic bites

AB InBev withdrew its earnings outlook for 2020 and Pernod Ricard forecast a 20% drop in profit as the coronavirus pandemic eliminates most of the revenue that drinks makers get from bars and restaurants.

AB InBev abandoned its target that earnings growth could reach 5%, the world’s largest brewer said on Tuesday.

Pernod now expects the steepest earnings decline in years. Businesses big and small have been hit by the outbreak, which has upended lives and social norms across the globe.

Many countries have ordered bars and restaurants to shut to try to slow the spread of Covid19 as the disease has reached almost every country.

Companies from aircraft manufacturer Airbus to retailer Macy’s have withdrawn earnings forecasts and suspended dividends. Pernod said it gets a quarter of its revenue from bars and restaurants, and it is forecasting that business will be absent from mid-March until at least June.

The company expects a slow recovery in China starting in April, and sales from duty-free and shops in travel locations will drop 80% in the five months through June.

AB InBev also pushed back the closing date for the $11bn sale of its Australian operation, Carlton & United Breweries, to Japan’s Asahi Group because it remains under review by Australian competition regulators.

The deal is now expected to close in the second quarter, the beer maker said.

Pernod, which has dropped about 20% since December, gained 2.9%. The bleaker outlooks show that the industry is not banking on an uplift from any alcohol hoarding.

BARS AND RESTAURANTS HAVE BEEN ORDERED TO SHUT IN MANY COUNTRIES, SEVERELY REDUCING LIQUOR SALES

In February, AB InBev predicted its worst quarter in a decade as it factored in the impact from China’s lockdown, and CEO Carlos Brito’s annual bonus was cut.

Now, as China slowly recovers, the virus is wreaking havoc on the rest of the world. The UK ordered pubs to shut last week, and Hong Kong on Monday banned restaurants and bars from serving alcohol.

The brewer is starting to produce hand sanitiser and disinfectants as part of virus relief efforts.