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Bud Light parent Anheuser-Busch InBev turns profit as it reaches tentative agreement with union

Anheuser-Busch InBev (BUD) is slowly recovering from last year's hangover.

The Bud Light maker posted a profit in its fourth quarter and fiscal 2023 results, released before Thursday's market open, and after it narrowly avoided a strike at 12 US breweries by reaching a tentative agreement with the Teamsters late Wednesday.

The brewing giant's quarterly revenue increased 6.2% to $14.47 billion, slightly below the $15.66 billion expected. Higher prices were offset by its US performance, where the Bud Light brand is still trying to turn a corner. Full-year revenue rose 7.8% to $59.38 billion, compared with the $60.52 billion the Street estimated.

Volume declined 2.6% last quarter, compared with the 1.48% drop that Wall Street anticipated. Beer brands pulled the total lower, down 3.6%.

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In the US, Q4 revenue came in 17.3% lower year over year, as sales to retailers fell 12.1% due to the poor performance of Bud Light. March 4 marks 11 months since a marketing campaign with transgender influencer Dylan Mulvaney sparked a widespread boycott of the brand. Bud Light subsequently lost its crown as America's favorite beer to Modelo in May.

For the full year, volume dropped 1.7%, more than the expected dip of 1.34%. That's compared with a 2.3% jump in fiscal 2022. Total revenue increased 7.8% to $59.38 billion, while adjusted earnings grew year over year to $3.05 per share.

On a call with investors, CEO Michel Dimitrios Doukeris called it a "challenging year" for its US business. "Our market share continued to improve gradually from May through the most recent weeks in February," he said.

AB InBev ended the year with 38.3% share of the US beer market, according to Doukeris.

The company has provided financial assistance to wholesale partners while forging new sports partnerships to market its brands in an effort to support the business, he added.

Out of the $1 billion buyback announced in Q3, $870 million was completed as of Feb. 23, 2024.

All eyes are on how 2024 will play out as Anheuser-Busch also has to contend with changing consumer preferences, like the switch to Mexican import beers.

Constellation Brands (STZ), which owns Modelo, Corona, and Victoria, may already be winning there, per Bank of America analyst Bryan Spillane and others. Mexican brands are expected to make further headway, said Bump Williams of Bump Williams Consulting.

"We've already seen retailers in the back half of '23 give more shelf space to these brands in this segment," Williams told Yahoo Finance. "We're going to continue to see that probably expand more as the spring sets get launched in March, April [2024]."

In 2024, AB InBev expects EBITDA to grow 4-8%, reflecting the impact of "inflation and other macroeconomic conditions" as it doubles down on beer. In the release, the company said it believes in the "potential of the beer category" in order "to generate superior long-term value."

Teamsters working nationwide at Anheuser-Busch have voted by an overwhelming 99 percent to authorize a strike. (Courtesy: International Brotherhood of Teamsters)
Teamsters working nationwide at Anheuser-Busch have voted by an overwhelming 99% to authorize a strike. (Courtesy: International Brotherhood of Teamsters)

Against that backdrop, Anheuser-Busch reached a tentative agreement with Teamsters on Wednesday evening. The current contract was set to expire on Feb. 29 at midnight, and 99% of the 5,000 members voted to walk out if a deal was not reached.

The five-year agreement includes improved wages, healthcare, and retirement benefits. It recognizes the "talent, dedication and hard work" of its employees, US CEO Brendan Whitworth said in the release, while also "positioning the company for long-term success."

Teamsters general president Sean M. O'Brien said members were "prepared to do whatever it would take to get a fair agreement."

Rival Molson Coors (TAP) is currently experiencing a strike with the same union, but it's isolated to a single brewery in Fort Worth, Texas.

No contract has been reached, but Molson Coors chief communications officer Adam Collins told Yahoo Finance that the team has "strong contingency plans" to fulfill demand. The location is still "brewing, packaging and shipping" products with other employees.

Its five other breweries have "extra production capacity" and bulked up inventory ahead of time, Collins added.

Collins said the team is "committed to reaching an agreement that is fair to everyone."

But Teamsters are hoping Molson Coors takes a page from its competition.

"Teamsters continue to hold the line at Molson Coors in Texas for a fair contract, but Molson Coors should pay close attention to the bar we’ve set today for brewery workers across the country," O’Brien said in the release.

The earnings rundown

Here's what Anheuser-Busch InBev reported for its fiscal fourth quarter earnings and what was expected, per Bloomberg consensus data:

Revenue: $14.47 billion versus $15.66 billion

Adjusted EPS: $0.82 versus $0.81

Volume Growth: -2.6% versus -1.48%

Here's what Anheuser-Busch InBev reported for its fiscal 2023 year and what Wall Street expected, per Bloomberg consensus data:

Revenue: $59.38 billion versus $60.52 billion

Adjusted EPS: $3.05 versus $3.02

Volume Growth: -1.7% versus -1.34%

*This story was updated to reflect the tentative Teamster agreement reached Wednesday evening.

Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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