E-Malt.com News article: 3551

Colombia, Bogota: Grupo Empresarial Bavaria (GEB), the largest beverage company in Colombia and the second largest brewer in South America, announced on October 28, 2004 its earnings for the third quarter of 2004. GEB reported net sales of Ps.1.2 trillion (US$ 444 million), a 9.8% increase compared to the same period of the previous year. Sales volume reached 8.3 million hectoliters (hl), a 1.9% increase over 3Q2003, and EBITDA reached Ps. 497,545 million, increasing by 14.7%.

For the nine-month period of 2004, the company reported net sales of Ps. 3.5 trillion, a 3.0% increase compared to the first nine months of the previous year. Sales volume grew 4.2%, reaching 24.5 million hl. Nine month EBITDA reached Ps.1.4 trillion, a 9.7% increase com-pared to the same period in 2003.

Ricardo Obregón, president of GEB, noted: “We are extremely pleased with this year’s third-quarter earnings, particularly with our performance in Ecuador and Panama. Strong marketing efforts in these highly competitive markets, in addition to our continued efforts to improve the efficiency of our operations while lowering production costs, has resulted in a higher demand of our products and increased operating profitability.”

Company’s sales volume grew 1.9% during the third quarter of 2004, reaching 8.3 million hl. Operations in Colombia registered a 0.3% increase. As a result of the termination of the Pepsi Co. franchise in July, total beverage volumes in Peru declined 0.5%. This slight contraction, however, was offset by excellent performance in Ecuador and Panama, which recorded volume in-creases of 16.4% and 6.5%, respectively. Sales volumes in the beer and malt beverage segment grew by 2.6%. Peruvian operations in the soft drink segment had a negative impact on the other beverages category as a whole, which contracted by 1.6%. For the first nine-month period of 2004, Ecuador registered a 14.4% increase in sales volumes, the largest increase, followed by Panama with 6.7%, Peru with 4.9%, and Colombia with a 2.1% increase. In terms of the beer and malt beverage and other beverages categories, sales volumes registered growth of 3.9% and 5.8%, respectively. The following table shows each country’s sales volume for 3Q-2004 in both the beer and malt beverage and other beverages categories, and their percentage growth with respect to 3Q-2003.

Colombia: A 0.3% increase in total sales volume is explained in part by the sluggish growth in mass consumption, as demand has shifted toward durable goods. Compared to previous years, rainfall this year has been unusually high, particularly during the third quarter of 2004. Climatic conditions have predominantly affected consumption trends in the northern coastal regions of the country. Beer smuggling on the Venezuelan border has also had a negative impact on sales. The beer and malt beverages category registered a slight contraction of 0.4% compared to 3Q-2003, while the other beverages category grew by 4.4%. This increase was led by 6.0% growth in water sales. According to Nielsen, GEB’s Agua Brisa brand had a 35.1% market share, keeping GEB as the market leader.

Peru: Sales volume in Peru fell by 0.5% when compared to 3Q-2003. This contraction is due to the early termination of the sales and distribution contract with Pepsi Co., effective July 1, 2004. While sales volume in the beer and malt beverages category grew 5.7%, other beverages contracted by 21.1%. Increased sales in the beer and malt beverages category reflect the overall stability of the Peruvian economy and a policy of keeping beverage prices constant, which together have stimulated demand for our products in this category.

Ecuador: Sales volume in Ecuador grew by 16.4% compared to 3Q-2003, the highest growth in the region, led by a 10.2% increase in beer and malt beverages sales volumes. Sales volume in this category increased dramatically in response to our aggressive marketing strategy launched prior to Inbev’s incursion into the Ecuadorian market starting October 2004. In Ecuador, GEB competes with bottled water in the other beverages category, which continues to perform favorably after its introduction during the 4th quarter of 2003.

Panama: Operations in Panama registered the highest growth for beer and malt beverages in the region, with an 11.7% increase compared to 3Q-2004. This category has performed favorably thanks to GEB’s increased promotional activities aimed at attracting consumers of other alcoholic beverages toward beer. Within the other beverages category, fruit beverages and other beverages grew by 41.5% and 3.8%, respectively. Tutti Frutti-brand fruit beverages, launched in June 2003, have won market acceptance and sales have exceeded expectations. Total sales volume in Panama grew by 6.5% compared to the same period of the pre-vious year.

GEB’s EBITDA for 3Q-2004 was Ps.497,545 million, 14.7% higher than EBITDA for the same period of the previous year. This increase reflects the good performance of sales volumes, operating efficiencies, and the non-consolidation of non-strategic operations available for sale in Peru. EBITDA margin was 43.0% in the quarter, 1.8% higher than EBITDA margin for 3Q-2003. The following table presents EBITDA calculations for 2004’s third quarter and percentage changes in comparison to the same period of the previous year.

Grupo Empresarial Bavaria (GEB) is the largest beverage company in Colombia and the second largest brewer in South America. It’s Águila, Cristal, Pilsener, and Atlas brands are industry leaders in Colombia, Peru, Ecuador, and Panama, respectively. GEB also markets soft drinks, fruit beverages, mineral water, and milk. GEB’s parent company is Bavaria S.A., listed on the Colombian Stock Exchange. In 2003, GEB sold 32.8 million hectoliters of beverages, representing a 5.7% increase compared to 2002. Consolidated net sales totaled Col. Ps. 4.74 billion (US $1.68 billon), a 64.8% increase from 2002. EBITDA reached Col. Ps. 1.87 billion (US $661 million), a 6.6% increase compared to 2002.


30 October, 2004