AB InBev cuts Brazil outlook as homes in on SABMiller

A promoter poses with a can of Budweiser Prohibition Brew, a non-alcoholic beer, while giving away free samples in Toronto, Ontario, Canada June 23, 2016. REUTERS/Chris Helgren

Anheuser-Busch InBev (ABI.BR), the world’s largest brewer, said its offer for nearest rival SABMiller (SAB.L) was final and could not be changed, as it cut its guidance for sales growth in Brazil this year due to the struggling economy.

The maker of Budweiser, Stella Artois and Corona raised its $100 billion-plus bid for SABMiller on Tuesday to quash investor dissent over an offer made less attractive by a fall in the pound following Britain’s Brexit vote.

“This offer is final and cannot be increased or otherwise changed,” Chief Executive Carlos Brito told a conference call.

AB InBev is still waiting for clearance by Chinese authorities and SABMiller’s view on the revised offer. It is offering 45 pounds per share, one pound more than in November, and has hiked its share-and-cash alternative by 88 pence.

“We believe the revised and final offer represents a compelling opportunity for all SABMiller shareholders,” Brito said.

SABMiller, with prized Latin American and African markets, has told employees to pause the integration of its operations with those of AB InBev as the board weighs the sweetened offer.

Nevertheless, Brito said the two companies had made significant progress together since November on regulatory issues, bond financing and asset disposals in the United States, China and Europe, as well as general integration planning.

“It remains our objective to close the transaction in 2016,” he said, declining to give further details on the planned takeover.

AB InBev’s core profit in the second quarter rose 4.3 percent on a like-for-like basis to $4.01 billion, below the average Reuters poll forecast of $4.13 billion.

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The company saw earnings growth in the United States, Mexico and China, but still suffered in its second-largest market, Brazil, due to a downturn that has dragged on for more than a year.

The company sold 4.5 percent less beer in Brazil than a year earlier in April-June, an improvement from the 10 percent drop in the first quarter but below AB InBev’s own forecasts.

It said it expected Brazil revenue this year to be similar to the level of 2015, down from previous guidance of growth by a mid to high single-digit percentage.

But it also cut its guidance for cost of sales per hectoliter to a low single-digit percentage increase, from a mid-single digit rise seen before, due to savings on procurement and efficiency and greater use of returnable bottles in Brazil.

The company has forecast that its revenue per hectoliter overall will grow ahead of inflation, partly as it pushes drinkers over more expensive beers, but with challenging conditions in Brazil and China.

(Editing by David Holmes)