E-Malt.com News article: 2645

Latin America: Quilmes Industrial (Quinsa) S.A. ("Quinsa" or the "Company") announced on May 12 its results for the three months ended March 31, 2004. Results for the first quarter of 2003 consolidate the operations of Companhia de Bebidas das Americas ("AmBev")'s Southern Cone assets ("ASCA") for the months of February and March, following the closing of the strategic alliance between AmBev and Quinsa on January 31, 2003. Thus, AmBev's beverage operations in Argentina, Paraguay and Uruguay have been consolidated as of that date.

EBITDA increased 98% to US$ 91.5 million compared to the first quarter 2003, while EBITDA margin improved more than 12 percentage points to 43.9%. Beer sales volumes increased 15% to 4.4 million hectoliters. Net debt decreased US$ 75.6 million to US$ 127.7 million, from March 2003. Net profit after tax improved to US$ 27.6 million, or US$ 0.222 per share, compared to US$ 1.0 million, or US$ 0.008 per share for the first quarter 2003.

Beer volume sales increased to 4,446,000 hectoliters from 3,863,000 hectoliters a year earlier, due to both continued volume growth in Argentina and Bolivia, and strong recoveries in Paraguay and Uruguay. Volumes for soft drinks increased approximately 6% compared to a year earlier, fuelled by good performances in both Argentina and Uruguay.

Net sales increased to US$ 208.3 million from US$ 148.0 a year earlier, principally due to higher prices in Argentina and volume increases in Argentina, Bolivia, Paraguay and Uruguay. Gross profit increased 79.1% to US$ 120.7 million from US$ 67.4 million a year earlier. This was largely the result of higher volume sales and also price increases, particularly in Argentina and Paraguay. Further, the cost of raw materials per hectoliter was virtually unchanged compared to last year, despite increases in commodity prices. The successful implementation of industrial synergies throughout last year was a determinant factor in terms of cost control. Thus, gross margin increased to 58.0% compared to 45.5% in 2003.

Selling and marketing expenses increased to US$ 41.6 million from US$ 35.1 million in 2003, principally due to an increase in advertising and promotion expenses in Argentina and Bolivia. In addition, transportation expenses increased as a result of the extension of direct sales and higher transportation costs.

Administrative and general expenses declined 5.4% to US$ 8.7 million despite two adverse effects: last year the Company consolidated only 2 months of the former AmBev's operations, and also local currencies appreciated significantly in Argentina and Paraguay. The effect of the latter is particularly important on salaries, the largest single component of administrative expenses, since it increases payroll as measured in dollar terms. Administrative headcount, however, declined 12% over the 12 months to March 31, 2004.

As a result of these variations, operating profit for the first quarter 2004 was US$ 70.4 million, a very large improvement on the US$ 23.0 million for the same quarter last year. EBITDA nearly doubled to US$ 91.5 million from US$ 46.1 million in 2003.

Argentina, Beer: Total volume sales, including exports, increased 12.2% to 3.2 million hectoliters. The Company's market share increased 1.6 points compared to the fourth quarter 2003, of which 1.1 points were due to our flagship Quilmes Cristal brand, allowing us to accomplish figures of 79.5% in terms of volume and 79.9% in terms of value for the first quarter this year, according to Nielsen.Net revenues increased to US$ 98.7 million for the first quarter this year compared to US$ 64.7 million last year. This improvement largely reflects the price increases introduced in March and September of 2003, and February of 2004, for approximately 33% on average. Also contributing to the increase was the Company's market share performance, which led to higher volume sales, and an appreciation of the peso relative to the U.S. dollar of approximately 6%.

Chile: The Chilean beer market reverted its recent trend during the first quarter 2004, as volumes declined approximately 3% according to Company estimates. The change in trend would appear to have followed the price increases introduced in November 2003. Quinsa's domestic beer volumes were 106,000 hectoliters compared to 142,000 last year. This was principally the result of having discontinued the sale of the Heineken brand in June 2003, while volumes for our proprietary brands Becker and Baltica declined 5.8%. Net revenues were US$ 6.8 million, virtually unchanged compared to last year despite the volume decline. This was the result of a 7% average price increase, in real terms, introduced during 2003 and a 25% appreciation of the Chilean peso relative to the U.S. dollar.

Uruguay: Total domestic beer volume was 161,000 hectoliters, compared to 101,000 hectoliters during the first quarter 2003. This performance finally reflects a recovery in the Uruguayan beer market, since it is the first time since the year 2000 that market volumes increase during the first quarter, compared to the previous year. This performance allowed for an increase in market share and was the result of the successful launch of the 1.25-liter glass returnable bottle.

Quinsa is a Luxembourg-based holding company, which controls 87.6 % of Quilmes International (Bermuda) ("QIB"). The remaining stake is held by Beverage Associates (BAC) Corp. ("BAC") and by Companhia de Bebidas das Americas -- AmBev ("AmBev"). Quinsa, through QIB, controls beverage and malting businesses in five Latin American countries. Its beer brands are strong market leaders in Argentina, Bolivia, Paraguay and Uruguay and have a presence in Chile. Further, pursuant to the Company's strategic alliance with AmBev, it has entered into license and distribution agreements to produce and sell in Argentina, Bolivia, Chile, Paraguay and Uruguay the AmBev brands. Similarly, under the agreements, AmBev may produce and distribute Quinsa's brands in Brazil.


14 May, 2004