Anheuser-Busch InBev Reports $1.5B Profit While Taking a Stand for the Value of New Product Development, Investing in Marketing, and Retaining Effective Management
The Orlando Business Journal (OBJ) recently reported: Anheuser-Busch InBev Reports $1.5B Profit.
I found at least two points in the article compelling from a business analysis perspective...
First, with all of the economy doom-and-gloom buzz still resonating in the media and water-cooler conversations throughout the U.S., a beverage company (InBev) turned $1.5B in profit up from $690 million reported a year ago before their merger with Anheuser-Busch. I find it fascinating and encouraging that two corporations, leaders in their industry, merged and doubled profits for one of the companies. There's something to be learned from A-B InBev wouldn't you say? Though revenues are down 10 percent from the $10.9 billion the combined companies reported a year ago before the merger, InBev's profits still doubled. I don't think that the OBJ article presents enough salient details to fully identify all of even the most critical causes for the profitability, however the OBJ article does mention significant cuts in expenses while yet rolling-out two new products.
I was also struck by the quotes at the end of the article that assess A-B InBev's business growth strategies:
"The third-quarter results confirm that the company's cost-cutting efforts, while risky, will lead to margin expansion..."
And:
"We continue to believe that if InBev cuts marketing expenses too much or if its personnel cost cuts drive off key managers at Anheuser-Busch, the top line could suffer, and, given the firm's leverage, profits would probably suffer as well."
Anheuser-Busch InBev is taking a stand for the value of new product development, maintaining a healthy marketing budget, and retaining effective management and leadership. Given the report of profits, especially during the economically gloomy fervor of 2009, I think Anheuser-Busch InBev is worth listening to now and probably worth further study of their business growth strategies and operational tactics.