Bud Profit Rises. Why AB InBev Stock Is Plummeting After Earnings.

Anheuser-Busch InBev’s brand portfolio includes Budweiser, Bud Light, Corona, Michelob, and Stella Artois ((Drew Angerer/Getty Images))

Anheuser-Busch InBev stock plummeted even though the brewer reported quarterly earnings which, on the surface, didn’t look all that bad.

The company, which sells household brands including Budweiser, Bud Light, Corona, Michelob, and Stella Artois said its profit rose to $1.67 billion in the quarter, up about 14% from the same period last year.

Second-quarter underlying earnings per share (EPS) came in at 98 cents on revenue of $15 billion. Analysts polled by FactSet had expected EPS of 96 cents on revenue of $15.3 billion.

Yet, the brewer’s American depositary receipts (ADRs) fell 9.2% to $60.39 in premarket trading while its Belgium-listed shares were down 8.9%. The ADRs are on track for the worst day since early 2020.

Investors were focusing on the company’s declining volumes, which were down 1.9% in the quarter with beer down 2.2%. Non-beer volumes were up by 0.3%.

The weak volumes were largely driven by soft demand in China and Brazil.

Shares of beer, wine, and liquor companies including AB InBev are having a rough time as many consumers have cut back on alcohol. Shares of Diageo , the company behind Johnnie Walker Scotch whisky, Molson Coors Beverage , and Boston Beer , among others, are down double digits so far this year.

Jefferies analysts led by Edward Mundy said AB InBev’s declining volumes weren’t a surprise and there were bright spots in the earnings report. Even though volumes for China and Brazil were down significantly, volumes in other markets combined increased 0.7%, according to the analyst.

Mundy has a Buy rating on shares with a target price of 70 euros, reflecting a 20% upside to Wednesday’s closing price.

Write to Elsa Ohlen at elsa.ohlen@barrons.com