Anheuser-Busch InBev Posts Sharp Profit Drop

BRUSSELS—Anheuser-Busch InBev NV, the world's largest brewer, reported a sharp drop in net profit for the second quarter that missed analysts' expectations, as revenue fell in four of the company's six markets, including the U.S. and Brazil.

Leuven, Belgium-based AB InBev said net profit fell to $1.9 billion in the three months to end-June from $2.8 billion in the corresponding period a year earlier. The brewer booked a loss of $139 million on derivatives used to hedge the price of shares it hands out as compensation to employees.

Revenue for the maker of Budweiser, Corona and Stella Artois beers fell to $11.1 billion from $12.2 billion a year ago. The brewer attributed the decline to weak economic conditions and poor weather in several key markets, as well as a tough comparison with a year-earlier period that included the impact of the soccer World Cup tournament in Brazil.

The performance marked a rare miss for AB InBev. The company's shares fell as much as 4.9% on the Brussels stock exchange before recovering some of the lost ground.

"All in all, the [result] was below the market's estimates on volumes, top line, the operating result and the bottom line, admittedly on difficult" comparisons with the year-earlier period, wrote Hans D'Haese, an analyst at Bank Degroof, in a note to clients.

Sales volume in Brazil fell by around 8% due to a weak economy and a comparison with a year-earlier period during which the country hosted the World Cup, Chief Executive Carlos Brito said. The World Cup effect accounted for around 5.5 percentage points of that year-to-year decline, the brewer said.

AB InBev's results were also hurt in Mexico, where sales volumes rose but revenue declined 19% to $1.06 billion, and in Europe, where volumes were down and revenue fell 23% to $1.15 billion.

In its largest market—the U.S.,—where the company is trying to revive the Budweiser brand, sales to retailers fell 2.2%. Even Bud Light, which accounts for nearly one of every five beers sold in the U.S. and has remained relatively strong, lost ground slightly in the quarter. The brewer has been struggling to adjust to changing tastes as U.S. consumers increasingly favor craft and Mexican beers over AB InBev's mass-market lagers. "We can and must do better with Bud Light," Mr. Brito said.

While advertising campaigns have helped to slow Budweiser's declining market share, Felipe Dutra, AB InBev's chief financial officer, said it was "a multiyear effort."

"The feeling that the recovery of U.S. beer this year, with lower gas prices, there's no sign of that," said Ian Shackleton, an analyst with Nomura.

In China, sales were essentially flat despite poor weather and economic headwinds, the brewer said. Mr. Brito said he felt good about progress in that country this year and that sales would improve with warmer weather.

Meanwhile, AB InBev said it had completed a previously announced $1 billion share buyback program in June. "At this point we didn't feel necessary to launch a new program," Mr. Dutra said.

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