Asia: Budweiser Brewing Company APAC reports 8.6% drop in Q2 profit

Budweiser Brewing Company APAC, the biggest beer maker by sales in the Asia-Pacific, said profit dropped 8.6 percent in the second quarter from a year ago mainly because persistent rain subdued consumption in China and a high base a year earlier, Yicai Global reported on August 2.

Net profit was USD254 million in the three months ended June 30, the Hong Kong-based company said in a financial report released yesterday. Revenue fell 7.8 percent to USD1.8 billion, with beer sales dropping 7.3 percent to 2.5 billion liters, it added.

Sales in China fell 10.3 percent in the second quarter, "impacted by a soft industry, which cycled channel reopenings a year ago, and adverse weather in key regions of our footprint," Budweiser APAC noted. Overall revenue dropped 15.2 and that per a hundred litters fell 5.4 percent due to heavy precipitation across Guangdong and Fujian provinces, where a big proportion of its premium geographic footprint is focused, it added.

For the first half, net profit narrowed 5.9 percent to USD541 million, Budweiser APAC said. Revenue fell 4.3 percent to USD3.4 billion, while beer sales dropped 6.2 percent to 4.66 billion liters.

"While our performance in the first half of this year was negatively impacted by a soft industry in China, our geographic footprint with strong growth in South Korea and India mostly offset our performance in China," Budweiser APAC pointed out.

Budweiser APAC's poor performance in the second quarter is unusual for a special reason, Chief Executive and co-Chair Jan Craps said at an earnings conference call yesterday, noting that he remains bullish about second-half results, although the weather last month was tough. The firm's overall and channel strategies and sports marketing efforts are progressing according to plan, he added.

China's beer market will face some fluctuations in the short term, but the trend of upgrading products to high-end has not changed in the medium and long term, Craps noted. High-end beer accounts for only 17 percent of the Chinese market, compared with a 40 percent share in other developed countries, so Budweiser APAC will continue to focus on a high-end strategy for its production capacity layout and investment, he said.

In addition, Belgian beer giant Anheuser-Busch InBev, the owner of Budweiser APAC, is a global partner of the Paris 2024 Summer Olympic Games, Craps pointed out. The unit launched Corona Cero, a new brand of zero-alcohol beer, to meet demand during the games and will continue to develop the important business area, he added.

Zero-alcohol beer has only a small share of the Chinese market, but the rising health concerns of younger consumers have brought new changes to beer consumption, Craps noted, adding that this business has developed rapidly in South Korea and India.

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