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Transcript of AB/InBev
Factoids (cc) photo by Metro Centric on Flickr (cc) photo by Franco Folini on Flickr (cc) photo by jimmyharris on Flickr Stockholm (cc) photo by Metro Centric on Flickr Balance Sheet Based in St. Louis, Anheuser Busch is the leading American Brewer Anheuser-Busch merged with InBev in 2008 Consumer-centric and sales driven, AB InBev manages a profile of well over 200 brands The AB/InBev merger stemmed from a previous merger of AmBev and InterBrew In 2004, Interbrew and AmBev merged, creating the world's largest brewer, InBev Cash Flows Statement Income Statement AB InBev is #1 or #2 position
in 19 countries. The current alcohol industry is prevalent among all demographics.
Regardless of a weak economy, a shift in consumer taste for premium products and the AB-InBev merger has enabled high profitability.
Revenue of 36.3 Billion US Dollars Total Revenue increased from 22.5 in 2008 to 36.7 (in millions) in 2009 which seems to be increasing at a decreasing rate. Strengths Leading market position
Strong brand recognition and portfolio
Product development expertise
Strong revenues Weaknesses Changes in managment structure due to merger resulted in a 6% cut in employees, elimination of the free beer program, and focused on incentive-based pay structures for their workers. In 2008, Anheuser-Busch merged with InBev which resulted in an increase in Accumulated Depreciated because they acquired more Property, Plant and Equipment. Due to the merger of Anheuser-Busch and InBev in 2008, their Net Income for that year was considerably less because of the different expenses associated with the transition. Their purchase of investments in 2008 was also at an abnormally high rate due to the merger. In 2008, AB InBev had a large debt due to the acquisition. This signified growth after the merger. Negative change in debt as shown in years 2009 and 2010 could be due to the fact that AB InBev had decided to payout dividends and stock repurchases. In 2008, InBev incurred 7.78% debt which had decreased by 2009 by 5.21%. This seems to be related with their new corporate governance which included an incentive based pay structure. Aside from the new pay structures, 1,400 U.S. employees were laid off post merger. Market concentration
Strong dependace on wholesalers Opportunities Growing beer consumption in China Adverstisement and sponsorship agreements Focus on growth of "craft" beer trends Threats Industry consolidation Rising prices for raw materials Changing preferences Results In comparison, Molson-Coors had a loss of revenue of 1.5 (in millions). This was largely due to the fact that their target demograpic has fluctuated and rising costs of aluminum and barley. Liquidity Ratios Profitability Ratios Effectiveness Ratios The company's underlying earnings increased more than 85% than 2008 in 2009 as a result of a one-time reduction in the tax rate. The company also gained $46 million as a result of the sale of its 19.9% controlling interest in the Montréal Canadiens NHL team. Solvency Ratios Molson-Coors had an increase in accumulated depreciation at a steady rate from 2008 to 2010. AB InBev's Gross Margin outperforms their competitor and their industry's 45.6% median by roughly 10%. In 2008, Molson-Coors had a low current debt due to their restructuring. In 2009, their current debt increased at a far higher increasing rate due to stabilization and revinvestment in the company. Molson-Coors pays bills and sells inventory faster than AB-InBev. AB-InBev holds higher Asset Turnover and A/R Turnover than Molson-Coors. Unlike AB InBev, Molson-Coors' Net Income actually doubled from 2008 to 2009 due to higher efficiency management protocol's which improved factory efficiency by 15% . Investments also had a drastic spike due to investments in the Miller/Coors Joint venture. Main weakness: AB-InBev financed more
assets with debt. 5 AB-InBev is more levaraged than Molson-Coors. AB-InBev has a higher ratio in Debt to Equity; this means the company has a higer risk level than Molson-Coors. AB-InBev has managed to drive costs and reduce its expenses via their Better World green initiative.
As well as AB InBev, Molson-Coors also showed a large change increase in debt primarily caused by the company's new focus on long term growth and corporate sustainability. Return on Equity are below the Industry Average and above Molson-Coors. AB InBev has a higher ROE since they acquired Anheuseur-Busch's outstanding indebtedness owed to its shareholders. Any questions, comments, concerns? AB InBev currently controls roughly 50% of the U.S. market share. Deals in the horizon with SABMiller is a high possibility. If the deal goes through, AB InBev will dominate the competition further with a 75% presence in the market. Molson Coors Created By the Merger of Molson of Canada & Coors of the US 5th Largest Brewer by Volume Controls 11% of the Market Share Fastest growing competitor due to target market 114,000 employee worldwide. Increase in interest rates (foreign and domestic) Government regulation Debt due to acquisition of AB Absorption of AB caused low current and quick ratios
compared to their competitor(s) in 2008 due to low
Explanation: Post-acquisition cost cutting methods
included lengthening their A/P terms.
Efforts to deleverage = Increase in liquidity. Molson-Coors is a much smaller company in
terms of their capital resources and short-term
obligations. Advertising opportunities for Summer 2012 Olympics Low Profit Margin could be caused by price cuts due to
AB InBev's vulnerability to commodity volatility: reducing
prices to meet poor economy. Pre-merger: InBev had a large amount of intangible assets = inflated Total Assets = Reduced ROA%.