Brewer AB InBev reports sharp drop in profits

The world's biggest brewer Anheuser-Busch InBev reported a sharp fall in second quarter profits Thursday due to weak economic conditions in several markets and poor weather hitting demand.

The Belgian-Brazilian giant said three months to June net profit dropped to $1.98 billion (1.81 billion euros) from $2.61 billion a year earlier, when earnings got a boost from soccer's World Cup.

The news hit the share price hard, with AB InBev tumbling more than four percent in mid-morning trade.

"The second quarter was challenging, with tough comparables from the FIFA World Cup and weak economic conditions in a number of our markets," the company said in a statement.

"Unfavorable weather, especially in the US and China, added to the pressure," it said.

Sales by volume fell 2.2 percent.

However, sales by value were up 4.1 percent to $12.2 billion and operating profit gained 4.6 percent to $4.15 billion.

The company, formed in 2008 by the merger of Belgian-Brazilian group InBev and US brewing giant Anheuser-Busch, said its three top global brands grew a combined 6.4 percent in the quarter.

Corona led the way with 7.8 percent, driven by gains in Brazil, Canada and the United Kingdom.

Budweiser was up six percent, with "particularly strong growth in China," it said.

Stella Artois meanwhile rose 4.9 percent as a result of "good growth" in the United States, Argentina, Canada and the United Kingdom.

In the United States, sales-to-wholesalers declined by 1.1 percent while sales-to-retailers fell 2.2 percent as a result of bad weather.

However, Mexico saw volumes up 4.1 percent, despite an earlier Easter this year and the benefit of the World Cup recorded just a year ago.

In Brazil, which hosted the World Cup, volumes declined 8.6 percent, suffering from the comparison to last year and an "unfavorable macroeconomic environment."

In China, volumes fell 6.5 percent as a result of "poor weather across the country and economic headwinds," the brewer said.

"However, we started the second half with momentum behind our brands and commercial initiatives, and we expect to accelerate revenue growth for the remainder of the year, when compared to the first half," it added.