On Thursday, Anheuser-Busch InBev increased its annual dividend by 9%. However, experts cautioned that investors would be let down by the lack of a fresh share repurchase program and by worse-than-expected sales in the US.
After AB InBev spent years reducing debt to pay for an acquisition binge, investors are eager for returns from the world's largest brewer.
Although it became a worldwide beer giant as a result of that binge, it was unable to repay capital to shareholders since its debts were over $100 billion and were not being reduced as rapidly as expected.
More and more, it is trying to find ways to compensate them for being patient. By the end of last year, it has decreased its indebtedness by a further $1.8 billion, bringing the total down to $78.1 billion. "As a result, we have additional flexibility in our capital allocation choices."
Following the announcement of AB InBev's unusual share repurchase plan in October, which boosted company stock, the dividend rise follows. According to a report sent by Edward Mundy, an analyst at Jefferies, some investors could be let down that the repurchase program was not extended.
Analyst James Edwardes Jones of RBC Capital Markets elaborated by saying that US volume decreases were far greater than anticipated, yet the results were still "good enough" overall.
A consumer boycott of Bud Light, a significant U.S. brand, has impacted AB InBev's sales in its substantial U.S. business, causing it to lose its position as the best-selling U.S. beer. There was a 15.3% decline in the company's U.S. beer volumes during the fourth quarter.
AB InBev's average projection for the fourth quarter sales was 6.1%, although the firm itself recorded a 6.2% increase. Core earnings will increase by 4-8% in 2024, according to its medium-term estimate.
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