E-Malt.com News article: 1335

Mexico's top brewer, Grupo Modelo, reported on July 18 a 4.7 % rise of its second-quarter net profit up to 1.486 billion pesos (US$143.3m). Modelo, maker of Corona, top selling foreign brew in the United States, and other beers, said sales in Mexico and abroad rose a combined 6.5 % in volume terms. Shipments in Mexico, which represent around 70 % of Modelo's volume, rose 6.3 % in the second quarter. "Exports grew 7.2 %, and there was a pointedly sharp spike of sales to the United States toward the end of the quarter," Modelo said.

The company attributed the rises to a spell of unusually hot weather that boosted beer drinking. Mexico had roasting hot weather in April and May. Easter Week, a traditional holiday period, also fell in April this year rather than in March, helping the second quarter results. "Domestic volumes, especially in April and May, were driven by the hot weather and by the Easter Week which this year was in the second quarter," said Mauricio Brocado, an analyst with Deutsche-Ixe.

Meanwhile revenues rose 5.9 % to 10.825 billion pesos in the second quarter and operating margins also improved as costs rose at a slower pace. "This increase (in sales) reflects mainly the solid growth in total volumes," Modelo said in a statement. Analysts said Modelo's higher than expected volume increases were a positive surprise. In the first quarter, national sales grew a timid 1.2 %, but export volumes fell 7.8 %.

Modelo's shares were up 0.63 % at 24 pesos in Friday trade on the Mexican bourse. Modelo's shares are down 5 % this year, trailing the 14 % advance of the Mexican bourse's leading index.

Looking ahead, Interacciones analyst Jose Antonio Martinez de la Vega said foreign brokerages could raise their recommendations on Modelo because domestic volumes had been expected to come in weaker. "These results show that consensus has been a bit severe on Modelo's valuation, so we do no rule out a positive recovery of the share price in the short term," Martinez said in a note.

Half-owned by the world's top brewer Anheuser Busch Cos. Inc., Modelo also makes Victoria, Pacifico and Negra Modelo beers. Its main rival in Mexico is Femsa. Together the two brewers have actually 100 % of local beer sales. Imports amount to a mere trickle.


21 July, 2003