AB Inbev– Annual Report 2013
14 June 2014
Last reported year – 2013
AB Inbev is the leading global brewer, having revenues of more than 45 billion USD per year, employing over 150.000 people. They come from a very modest background: local breweries in Belgium, where the headquarters of this giant are still to be found.
Their recipe for growth is classical but they have mastered it as the best: save some money and borrow some, purchase another brewery, add it to the installed base, operate the bigger company, make more money, borrow some more, purchase another company and so on…
As a result, the revenues have grown exponentially: 14 years ago, in 1999, their annual revenues were 3.2 billion dollar, today 45 billion, which is x 14, or 1300% growth, or 21% annually during 14 years, an amazing growth. However, since the share amount has equally grown, the net share price has not grown that much: around 7 % annually as an average over the last 10 years. Add to that a net dividend yield of 1% (today 1.8%) for a total annual return of 8%.
Today’s share price of 82 (EUR) is expensive: a PE of 16 is high for a company with 7% growth. We would consider a share price around 65 EUR more appropriate. So on the shorter term (next years), a 20% drop of the share price is a possibility. On the longer term, the high price of today is combined with a steady growth expectation, giving a total expected annual return of 5.6 %, with a lower range of no profits, and a higher range up to 11% annually.
All in all not a superior return to be expected from this giant.
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