(Bloomberg Opinion) -- After a frenzy of activity over the past year, Anheuser-Busch InBev NV is still on the wrong side of the beer mat.

On Friday, the world’s biggest brewer reported that earnings growth stalled in the third quarter, especially hit by new sales restrictions on alcoholic drinks in China.

The company downgraded its forecast for expansion in full-year earnings before interest, tax, depreciation and amortization to moderate. Previously it had expected this to be strong. The shares fell as much as 11%.

The caution on earnings at the King of Beers is particularly worrying. An acquisition machine, AB InBev’s strength has always been in its ability to raise prices and grind out costs to fatten margins.

It’s increasingly clear that the brewer of Budweiser and Michelob beers needs to do more deals to turbocharge growth and merit its crown. Yet it’s in a bind. It doesn’t have much leeway to make a sizeable deal that would make a big difference.

AB InBev has made valiant efforts over the past year to strengthen its balance sheet. In the last 12 months it has halved its dividend, raised gross proceeds of $5.75 billion from listing its Asia Pacific unit and another $11.3 billion from selling its Australian arm to Japan’s Asahi Group Holdings Ltd.

These actions together imply a cut in net debt to at least $86.9 billion at the end of 2019. Second-half cash flow – which is typically stronger than in the first six months of the year – should reduce this figure even further. AB InBev said net debt would be less than four times EBITDA at the end of 2019, a year earlier than the company’s previous guidance.

While this is better than the 4.6 times at the end of 2018, it is still well above the 3 times at which investors start to become nervous, and the company’s own long-term target of 2 times. And of course, to continue the progress, the earnings side of the equation needs to keep growing too.

The weak performance in the third quarter underlines the need for AB InBev to do deals to lift its sales growth and employ its cost-cutting prowess.

The company has the benefit that it can use shares in the Asia Pacific business as an acquisition currency. But Duncan Fox, an analyst at Bloomberg Intelligence, notes that it probably has only about $10- $11 billion to play with before it relinquishes control of the unit, something it will not do. While that’s useful, with valuations rich in the region, it probably won’t go that far.

The fact that Asia was weak, hindered by rules in China curbing the sale of alcoholic drinks after 2 a.m. and the impact of price increases in South Korea, is also unhelpful. Shares in the newly listed Budweiser Brewing Company APAC Ltd. fell as much as 7.7% on Friday after the brewer reported a 23.5% drop in third quarter net income.

With debt still high at AB InBev despite the deleveraging progress, all this probably implies more moderate purchases.

The group has the ability to surprise – take the sale of the Australian business days after abandoning its first attempt to list the Asian business in July – so a blockbuster can’t be entirely ruled out.

But for now, it looks like it will have to settle for small beer, rather than another megabrew.

To contact the author of this story: Andrea Felsted at afelsted@bloomberg.net

To contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.

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