Coronavirus or COVID-19 is sparking fears worldwide and hammering the stock market. The beverage industry is not immune from the effects of predicted pandemic. The burgeoning problem was on full display today as AB InBev attributed their worst quarter in a decade to the disease.
AB InBev, the world’s largest brewer estimated that the virus cost them $170 million in profits and $285 million in revenue during the first two months 2020.
“The impact of the COVID-19 virus outbreak on our business continues to evolve. The outbreak has led to a significant decline in demand in China in both on-premise and in-home channels,” stated the corporation’s quarterly review. “Additionally, demand during the Chinese New Year was lower than in previous years as it coincided with the beginning of this outbreak.”
According to Bud’s preferred adjusted metric of earnings before interest, taxes, depreciation and amortization (EBITDA), profits are down 5.5%. The company reported that they expect the numbers to drop a full 10% by the end of the quarter. That figure is a far cry from the 1.9% projected by financial analysts.
Accordingly, CEO Carlos Brito’s bonus was cut for the period.
However, AB InBev said that it’s not all bad news. Amidst a flashy ceremony replete with party officials and lots of press, the company reopened their Shanghai offices last week. After closing 33 facilities in China at the outbreak of the epidemic, AB has now reopened more than half of the plants. The remainder—save the Wuhan brewery—have been okayed for reopening. (Mind you, AB InBev is also distributing protective masks to employees and communities in China.)
Still issues remain. The brewer announced plans the reallocate their beers with reduced shipments to bars and public places and an emphasis on off-premise sales. Likewise, COVID-19 has gone global and the brewer’s markets in countries outside of China will likely be affected.