AB InBev: Lots of fizz and pop puts investors’ nerves on edge


AB InBev: Lots of fizz and pop puts investors’ nerves on edge

Global brewer has become the sort of volatile stock more commonly associated with commodities

Ann Crotty

The AB InBev share price (https://www.sharenet.co.za/v3/quickshare.php?scode=ANH) remains under pressure more than a week after releasing disappointing third quarter results. The share price plummeted 11% on the news, wiping out R200bn of shareholder value. This is as much as Steinhoff (https://www.sharenet.co.za/v3/quickshare.php?scode=SNH) shareholders lost in the months after the “accounting irregularities” were disclosed in December 2017. But in AB InBev’s case there is a very good chance this lost value will be recovered, plus lots more value added.

But AB InBev has become the sort of volatile investment more commonly associated with commodities, which means shareholders need nerves of steel. At its current level of R1,202 it is about halfway between its 12-month high of R1,513 and low of R930.

The group continues to struggle to reduce the debt levels that ballooned when it bought SABMiller for just over $100bn (about R1.477-trillion) three years ago. Despite record low levels of global interest rates, the high gearing has made the world’s number one beer group vulnerable to all the twists and turns that inevitably blight a consumer-focused company when global trading conditions are tough. ..

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