E-Malt.com News article: 4332

Belgian brewer InBev, which produces Stella Artois and Beck's, announced on March 2 a 50% increase in its profit after its acquisition of AmBev, which made it the world's biggest beer maker by volume. In such a way the company is outpacing Dutch rival Heineken whose guidance last week was less optimistic. InBev forecast an over 50% growth of its profit this year. At the same time John Brock, InBev’s CEO said InBev would consider further acquisitions in Latin America, China, Russia and Germany.

John Brock commented: “The overall results for 2004 indicate that our new company is firmly on track to deliver sustainable organic volume and profit growth, as well as EBITDA margin expansion, in 2005 and beyond. They reflect InBev’s solid performance and its confidence in the future. I am pleased to already see the fruits of the combination of Interbrew and AmBev, and I look forward to the further success of our global flagship brands, Stella Artois, Brahma and Beck’s.”

InBev also proposed a dividend increase of 8.3 percent to 0.39 euros per share despite a 33.3 percent increase in the total number of outstanding shares at end of 2004. InBev's stock was up 0.3 percent at 28.87 euros in Brussels, not far from its year high of 29.70 euros.

Chief Executive John Brock said he expected volume sales to keep growing at two times the industry average in 2005. "We believe we have the right brand portfolio and the right country mix that should enable us to do that," he told reporters on a conference call. Brock reiterated his aim to become as efficient as Anheuser-Bush (BUD.N: Quote, Profile, Research) , the largest U.S. brewer, with a margin on earnings before interest, tax, depreciation and amortization (EBITDA) of 30 percent by 2007. The margin was 24.6 percent in 2004.

Heineken gave a less optimistic outlook on its business last week, when it did not rule out a profit decline. The Dutch brewer has not been as aggressive an acquirer as InBev to protect itself from stagnating growth in mature markets like Europe. ING analyst Gerard Rijk said AmBev's strong business was helping InBev stay ahead of its rivals. "It's the Brazil business that is doing it," he said. Also known as Companhia de Bebidas das Americas, AmBev reports its results later in the day. It was acquired by InBev -- formerly known as Interbrew -- last August.

Brock dismissed speculation that InBev was interested in Bavaria after the Colombian brewer said it was looking at a merger or partnership with a global brewer. "There appear to be people out there who are more interested than we are," he told reporters. But later at a news conference in Leuven, outside Brussels, Brock said Latin America, China and Russia were key areas InBev would consider for further acquisitions. In mature markets, Germany was high on its list for acquisitions. "We would want to have a seat at the (negotiating) table," Brock said.

InBev's earnings before interest and tax (EBIT) rose 49.2 percent to 1.25 billion euros ($1.65 billion) in 2004. The figure, which includes contributions from AmBev for the last four months of the year, was slightly higher than the average 1.19 billion euros forecast by 7 analysts polled by Reuters. Excluding acquisitions, EBIT grew 11.5 percent.

EBITDA advanced 41 percent to 2.11 billion, below the 2.6 billion euros expected by analysts. Excluding acquisitions, EBITDA was 8.9 percent higher. Net turnover rose 21.6 percent to 8.57 billion euros -- a 4.3 percent rise without acquisitions. Stella Artois and Beck's together grew 5 % in volume.

Ukraine had the strongest internal volume growth at 14.3 percent, followed by Russia at 11 percent.

AmBev's EBITDA margin for its domestic beer business increased 110 basis points to 42 percent. Brock said InBev kept looking at cutting costs. "It is not unrealisable during the course of a year or two that we will make announcements of (brewery) closures," he said. InBev has 114 breweries around the world, including AmBev and three breweries which InBev last year said it would close.

Brock said Western Europe would be "challenging" in 2005, with a flat market in the United Kingdom.

InBev gave the market an idea of what to expect in January when it said total volume sales were up 60 percent, but a mere 3.3 percent when excluding acquisitions.

KBC Securities analyst Philippe Rochez said he was concerned about the U.S. market now that InBev's joint venture with Mexican brewer Femsa to supply that market has been dissolved.


02 March, 2005