Anheuser-Busch InBev NV

Result of a merger between

the American brewing company Anheuser Busch and the Belgian

InBev

•Worlds largest brewing company, as well as one of the top 5 companies producing consumer products

• The companies 36 billion dollar revenue comes from its three worldwide flagship brands

• As well as over 200 local and regional beer brands

Income Statement

Observations

• Massive drop in net income in 2008– Surprisingly not due to reduced revenue from the

financial crisis, but rather from unusual expenses incurred due to restructuring after the merger

• Massive growth from 2008 to 2009– Revenue up 55% ($23 billion – $36 billion)

• Fairly stable figures between 2009 and 2010– Continued growth in revenue, while COGS dropped

slightly– The only negative is the slight loss in Minority Interest

Balance Sheet

Observations

• The balance sheet is a bit more worrying• Of $114 billion in assets, $75 billion are Goodwill

and other Intangible assets– Tangible assets are less than the company’s debts– Current Assets less than Current Liabilities

• Debt to Equity has been very high in recent years– Peaked in 2008 at 4.06– AB InBev has been successful in managing this debt– Down to 2.24 in 2010

CEO’s Comments

• Closed 2010 with 4.4% growth in revenue– This is not entirely accurate, he is actually talking

about profits here

• Grew or maintained market share across the board– Lost 1 point in the share of US market, due to

underrepresentation in the high-end beer market, the fastest growing segment

– The plan to reduce the price gap between sub-premium and premium beers, in order to initiate trading up seems like a promising way to make up this loss in the future

For Investors

• AB InBev’s has shown growth in the past several years, and an ability to maintain success in times of financial uncertainty

• There are also risks– Recent growth has been financed by significant

amounts of debt– Although the company has been successful in

managing this debt so far, there is no guarantee that it will not become problematic

• It is generally the policy of the company to issue dividends, but this did not happen in 2010

The Verdict

• Investors for whom dividends are very important should be aware that this may not necessarily happen, but for the mid-high risk investor, AB InBev shows great prospects, and a good chance of high return on investment