Budweiser’s Incoming CEO Faces Challenge Of Paying Down Debt In The Face Of Strong Commodity-Price Inflation
- ByStartupStory | July 3, 2021
This week, Michel Doukeris, Budweiser’s incoming CEO replaced Carlos Brito as head of the world’s biggest brewer Anheuser Busch InBev. Despite improving sales, leaving with the challenge of paying down debt in the face of strong commodity-price inflation. Net debt of $83 billion, a hangover from its 2016 takeover of brewer SABMiller, now stands at 4.8 times. In the past, the company relied on cost synergies from deals to boost profits. Now that AB InBev’s balance sheet is maxed out, it has to grow existing brands. A sales increase of 17% in the first quarter, compared with the 9% analysts were expecting.
The restrictions on the sale of shares worth around 17% of AB InBev’s market value will be lifted in just over three months’ time. Most of the stock is owned by Marlboro cigarette maker Altria, which was a major shareholder in SABMiller when it was taken over. The tobacco giant took a mix of cash and shares in the combined company as payment and agreed not to sell until October 2021. Uncertainty about what Alria will do with the stock is unhelpful for AB InBev’s share price.
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