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AB InBev earnings beat estimates on SABMiller takeover savings

London - Anheuser-Busch InBev, the world’s largest brewer, reported second-quarter profit growth that beat analysts’ estimates as it benefited from higher prices and cost savings after the acquisition of SABMiller.

Earnings rose 11.8% to $5.35bn on an adjusted basis before interest, taxes, depreciation and amortisation, the maker of Stella Artois said in a statement Thursday. Analysts expected 7.9% growth. The company said the second half looks “promising.”

AB InBev is seeking growth from new markets such as Africa, which it bolstered last year through a $104bn takeover of SABMiller. In its home market of the US, the Budweiser maker will devote $2bn to boost top brands and improve distribution. The money also will help support the company’s forays into “near beer,” alcoholic sparkling water and other products - such as tea - that are far afield from its original business.

Earlier this month, the company agreed to acquire Hiball, a San Francisco-based maker of energy drinks and cold-brew coffees.

The company is cutting more than 5 500 jobs as it aims to capture $2.8bn in cost savings from its acquisition of SABMiller in the next three to four years. AB InBev reaped $335m worth of savings from overlaps in the second quarter.

South African performance

Beer revenues in South Africa grew by 13.4% in the second quarter of 2017 driven by revenue growth of 2.4% and beer volume growth of 10.8% benefiting from the timing of Easter, it said.

In the first half year of 2017 in South Africa, revenue grew 9.7% with revenue growth of 5.1% and beer volume growth of 4.4%.

"This solid top-line growth was driven by a portfolio of brands with distinctive positioning and consistent through-the-line sales execution," it said. "The newly launched high end unit recorded promising growth in Stella Artois and Corona.

"Castle Lite continues its multi-year trend of strong growth in the core plus segment, while Carling Black Label has responded well to core plus pricing and consistent 'champion' positioning with impactful multi-media soccer activation.

"Lion Lager’s return to the portfolio in the value segment is making good progress at winning back share from inexpensive wines and spirits.

"In near beer, Flying Fish, an apple-flavored malt beverage, has performed very well during the quarter and has helped to win back category market share previously lost to ciders.

"When combined with the soft drink business, the South African business delivered 8.8% revenue growth in 2Q17 and 6.1% in HY17. This strong top-line growth combined with synergy capture resulted in EBITDA growth of almost 30% in 2Q17 and almost 20% in HY17."

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