©Reuters. FILE PHOTO: A worker checks the quality of beer at the Anheuser-Busch InBev brewery in Leuven, Belgium, November 25, 2019. REUTERS/Francois Lenoir/File Photo
LONDON (Reuters) – Anheuser-Busch InBev raised its annual dividend by 9% on Thursday, even as analysts warned investors they may be disappointed by the absence of a new share buyback and worse-than-expected U.S. sales.
Investors in the world’s largest brewer are hungry for returns after years of focus on reducing debt as AB InBev sought to pay off an acquisition spree.
That spree turned it into a global beer giant, but also left it with more than $100 billion in debt that it has struggled to reduce as quickly as possible, limiting its ability to return cash to shareholders.
Now he increasingly tries to reward their patience. He said he had reduced debt by a further $1.8 billion, to $78.1 billion at the end of last year.
“As a result, we have more flexibility in our capital allocation choices.”
The dividend increase comes after AB InBev announced a rare stock buyback plan in October, boosting its shares. Some investors may be disappointed that the buyback program has not been renewed, Edward Mundy, an analyst at Jefferies, wrote in a note.
James Edwardes Jones, an analyst at RBC Capital Markets, added that the decline in US volumes was also worse than expected, although overall the results were “pretty good”.
AB InBev’s sales in its massive US business have been hit by a consumer boycott of key US brand Bud Light, knocking it from the top spot as the best-selling US beer.
The company’s U.S. beer volumes slumped 15.3% in the fourth quarter.
AB InBev reported a 6.2% increase in fourth-quarter sales compared to analysts’ expectations of 6.1% according to a consensus estimate provided by the company.
Core 2024 earnings are expected to grow in line with its medium-term outlook by 4-8%.