Not every industry can be on the rise forever—not even beer. This is what an Anheuser-Bush subsidiary in Brazil found out in Q4 of 2016.
The offshoot of the beer industry giant, Sao Paulo-based Ambev, recently held its quarterly earnings call where it shared its less than stellar financial results. While Ambev saw a net revenue of 9.7 percent for Q4 2015, the beer sales dropped to 7.3 percent in Q4 2016. This drop in sales also resulted in a lower share of the beer market with to a reported 66.3 percent which management hopes to bounce back to its ideal level of 67 – 69 percent in 2017.
As Heineken continues to buy Brazil-area operations of Japan’s Kirin Holdings Co., competition in that location will also increase. While the competition will likely continue to see an upward trajectory, Ambev is feeling the impact. The company also reported its stock shares took a tumble to 3.8 percent which some are saying is the most significant decline since October 2015.
While Ambev’s Q4 earnings saw a downturn, its income increased to 13.5 percent stemming from a tax reorganization of international subsidiaries. Following the removal of this impacted the company’s net income which decreased to 15.9 percent.
Ambev’s CEO, Bernardo Paiva, commented on the company’s poor Q4 performance on the earning’s call and shared his hopes for this year. He said “The company’s market share is increasing and showing a positive trend in early 2017. Unemployment should stop rising thus increasing families’ disposal income, especially in the second half of the year.”
While Ambev hopes to see an uptick in sales in the latter half of 2017, it may take some time to rebound. At this time, the country’s currency is showing weakness due to imported items driving up costs for various companies.