Results first-take: 1H22 results above market expectations
- 1H22 sales volume decreased slightly by 1.4% y-o-y to 45m hl, inclusive of a flattish volume in 2Q22 amid COVID-19 impacts. Revenue was up 2.7% to US$3.45bn (2Q22: up 3.7%). Average selling price was up 4.2% y-o-y during 1H22 (2Q22: up 4.1%), driven by the ongoing premiumisation in all markets.
- Gross profit margin dropped organically by 2.3ppt to 50.7% due to raw material cost pressure in 1H22. Normalized EBITDA was up slightly by 0.4% to US$1,139m, above market expectations, while normalized EBITDA margin declined by 74bps to 33%.
- Normalized profit grew 10.6% to US$575m, slightly above market expectations.
- In APAC West (mostly China), sales volume contracted by 2.5% y-o-y during 1H22, inclusive of a 1.4% decline in 2Q22, mainly due to the COVID-19 disruptions in China. However, 1H22 revenue grew slightly by 0.3% to US$2.8bn, along with average selling price up 2.9% during 1H22, supported by the ongoing premiumisation trend.
- Sales volume of premium and super-premium segments also grew by double digits in BUD APAC’s expansion regions that were not impacted by COVID restrictions.
- In APAC East (mostly South Korea), sales volume and revenue were up 7.1%/13.9% y-o-y in 1H22, thanks to the strong market recovery. Normalised EBITDA was up 39.2% to US$182m, with EBITDA margin improved by 5.4ppt to 29.4%, still below pre-pandemic level (i.e. 1H19).
- Overall cost of sales was up 7.7% to US$1.7bn during 1H22, inclusive of a 9.2% y-o-y growth in cost per hl due to raw material cost pressure, partially offset by efficiency improvements.
- With the ongoing recovery in restaurant and nightlife channels amid the easing COVID-19 situations in China, we expect BUD APAC to achieve a better recovery momentum in both revenue and EBITDA of APAC West in 2H22.
- Given the strong market recovery in South Korea, BUD APAC should also continue to achieve at least a mid-single digit volume growth in APAC East, along with a double-digit growth in EBITDA for FY22.
- Recent softening of commodity prices (e.g., aluminum and barley) should also signal easing cost pressure in 2H22.
- Our current rating is BUY with TP of HK$32.73. More to follow after results briefing at 11:30am today (July 28).
