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Budweiser, Hong Kong’s biggest IPO in 2019, reports lower profit on weaker `nightlife channel,’ price fight in South Korea

  • Shares slide after regional arm of world’s biggest brewer says it faced ‘softness’ in nightlife channel in China
  • Budweiser Brewing Company APAC raised US$5 billion last month in Hong Kong’s biggest IPO this year

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Portfolio beer brands of Budweiser Brewing Company APAC are displayed during a news conference on the company's IPO in Hong Kong in July 2019. Photo: Reuters
Chad Bray

Budweiser Brewing Company APAC said on Friday that its profit fell 22 per cent in the third quarter, the first time Asia’s most profitable brewer has issued its report card since its revived US$5 billion initial public offering in Hong Kong last month.

The regional arm of the world’s largest brewer said that its volumes declined 6.5 per cent in the three months ended September 30 as it faced “softness” in its nightlife channel in China and a competitive and challenging environment for the industry in South Korea.

Budweiser reported a profit of US$257 million in the latest quarter, compared with a profit of US$329 million in the prior-year period. The results included US$53 million in non-recurring costs associated with its Hong Kong listing and business restructuring. Its normalised earnings before income tax, depreciation and amortisation, which do not include some non-recurring items, rose by 4 per cent on an organic basis to US$633 million in the quarter.

Hong Kong’s economy, which had slowed as the US-China trade war escalated this year, has also been hit hard by anti-government protests and civil unrest that have raged of five months. Restaurants, hotels and spirits makers have all said the demonstrations have weighed on their results as fewer tourists visit the city. Budweiser is the third-largest brewer by volume in China after China Resources Snow Beer Holdings and Tsingtao Brewery.

Chief executive Jan Craps said the company sees a lot of potential for acquisitions in the region and would look to pursue “potentially transformational M&A to capture inorganic expansion opportunities.” Budweiser previously said the listing would make it easier for the company to pursue acquisitions in Asia.

“We are confident that our strong commercial plans, unparalleled brand portfolio, robust route-to-market and, most importantly, our talented people, position us well to deliver long-term sustainable growth in Asia-Pacific,” Craps said.

Budweiser shares slumped 2.6 per cent in early trading on Friday morning, to HK$29.70, after hitting as low as HK$28.15. They have rallied 13 per cent since their debut on September 30 through Thursday.

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