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Total Expenses were $48.9 Billion, with Operating Expenses of $37.9 Billion, Non-Operating Expenses of $8.2 and $2.8 Billion in Tax Expenses
Breakdown of Anheuser-Busch InBev's Total Expenses in 2018 :
Total = $48.9 Bil
Operating Expenses = $37.9 Bil
Non-operating (income)/expense = $8.2 Bil
Provision for income taxes = $2.8 Bil
Anheuser-Busch InBev's total expenses have trended steadily higher from around $43.5 billion in 2016 to about $48.9 billion in 2018 (FY ends December).As a percentage of revenues, expenses have remained volatile and have ranged between 80% to 95%.Company's expenses are largely driven by cost of sales (COS) and distribution, sales and marketing (DSM) cost.The two expense heads together account for about 62% of revenues as of 2018, reflecting a drop from 66% in 2016, primarily due to benefits from the SABMiller acquisition.This decline from 66% to 62% has added a little over $2 billion to the company's profits, which translates into additional earnings of $1.06 per share in 2018.COS and DSM cost is further expected to drop to about 61% of revenues in 2019 and 2020, as volumes decline and large part of revenue growth would be driven by premiumization.Below, we take a look at the key drivers of Anheuser-Busch InBev's expenses and net margins.
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Anheuser-Busch InBev's Total Expenses Have Increased From $43.5 Billion in 2016 to $48.9 Billion in 2018
Change in Total Expenses
Anheuser-Busch InBev's total expenses have grown from $43.5 billion in 2016 to about $48.9 billion in 2018.
For 2019, we expect expect total expenses to stand at $47.9 billion, which comprises of
1) Operating Expenses: $37.6 billion
2) Non-Operating Expense (Income): $7.2 billion
3) Income Taxes: $3.1 billion
Below, we take a look at how the company's key expense components have trended and the key reasons for the change.
A) Cost of Sales have increased from $17.8 Bil in 2016 to $21.4 Bil in 2017 driven by higher commodity prices, before dropping to $20.4 Bil in 2018 due to lower volume sold. As a % Revenues, Cost of Sales has steadily decreased from 39% to 37% over the same period.
Cost of Sales
Cost of Sales as % of Revenue
B) Distribution, Sales & Marketing Expense has increased from $12.3 Bil in 2016 to $14.3 Bil in 2017 driven by higher spending due to FIFA World Cup, before dropping to $13.7 Bil in 2018. As a % Revenues, Distribution, Sales & Marketing Expense has steadily decreased from 27% to 25% over the same period due to a faster rise in the top line.
Distribution, Sales & Marketing
Distribution, Sales & Marketing as % of Revenue
(C) Administrative Expenses increased from $2.9 billion in 2016 to about $3.5 billion in 2018 due to higher expenses related to SABMiller integration. As a % of Revenue, Administrative expenses have remained between 6.3% and 6.8%
Administrative Expense as % of Revenue
D) Restructuring Expenses increased from $323 million in 2016 to about $468 million in 2017 due to costs related to restructuring the company to account for SABMiller's acquisition, before falling to $385 million in 2018 with a large portion of restructuring cost already incurred. As a % of Revenue, Restructuring expenses have remained around 0.7% to 0.8%
Restructuring Cost as % of Revenue
E) Acquisition Expenses decreased from $448 million in 2016 to about $74 million in 2018 as the company has already spent most of the amount related to SABMiller acquisition and spent money to recover the Budweiser distribution rights in Argentina from Compañia Cervecerías Unidas S.A. As a % of Revenue, Acquisition costs have steadily declined from 1.0% in 2016 to 0.1% in 2018
Acquisition Costs as % of Revenue
3. Anheuser-Busch InBev's Income Tax Expense has increased from $1.6 billion in 2016 to $2.8 billion in 2018, with Effective Tax rate declining initially to 17.3% in 2017 due to one-time tax credits, before rising sharply to $33.3% in 2018, driven by non-deductible mark-to-market losses
Income Tax Expense
Effective Tax Rate
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1. How to save your forecasts:
Click on the blue "Try Trefis" button in the header to create an account, then navigate back to this dashboard. Now, any changes you make to these inputs will be auto-saved as a scenario (see left panel of dashboard).
2. How to monitor your scenario vs. actual results
Once you've saved your forecast, you can "rename" your scenario by clicking on the gear icon next to the scenario (on the left panel). For more info, see this quick, 30-sec video (look at the 9 sec mark)
With your forecast saved and named, you can see how well you forecast the company's performance at the end of each period and compare your forecasts to hundreds of other Trefis users who came up with their own forecasts. Lastly, you can share with friends and colleagues to show them how you fared and compare your forecasts to theirs.