E-Malt.com News article: 3599

Brazil: Companhia de Bebidas das Américas – AmBev, the world’s fifth largest brewer and the largest brewer in Latin America, owned by InBev, announced on November 3 its results for the third quarter 2004 (3Q04). AmBev said third-quarter net income plunged as it boosted spending to promote its Brazilian brands and began consolidating its new Canadian business. AmBev’s consolidated EBITDA reached R$1,135.7 million in the quarter, already including Labatt’s results. EBITDA for AmBev’s operations pre-combination with InBev S.A. (“InBev”) reached R$976.7 million, up 25.6%. AmBev’s Brazilian beer business reached 67.0% market share in September, according to ACNielsen. Beer Brazil volumes increased by 17.1%, and net revenues per hectoliter reached R$120.3.

Consolidated net income for AmBev, as the Sao Paulo-based brewer with business from Canada to Argentina is known, fell 61 percent to 131.7 million reais ($46.4 million), or 2.39 reais per 1,000 shares, from 340.4 million reais, or 8.97 reais, a year earlier. Earnings came in lower than the 414.5 million reais median in a Bloomberg survey of the estimates of four analysts.

AmBev's drive to boost volumes and revenue in its core Brazilian beer market also cost it money as it spent more on promoting its brands, the company said in an earnings statement published on its Web site. At the same time, some investors worry about the ability of AmBev, which dominates Brazilian brewing, to generate profits in Canada, a new market it's entering as a result of its transaction with InBev, said Clecius Peixoto, who helps manage $10 billion in emerging market assets at Emerging Markets Management LLC in Arlington, Virginia. “It's not hard to create a good argument for AmBev's business in Brazil on the operating side,'' said Peixoto, who holds AmBev stock. ``As far as Canada goes, there's still a good deal of skepticism.''

AmBev said consolidated net revenue rose 46 % to 2.95 billion reais. Earnings before interest, taxes, depreciation and amortization, a measure of a company's ability to generate cash, rose 46 percent to 1.14 billion reais from 777.85 million reais a year ago.

Sales of beer by volume in Brazil, a market that contributes 71 percent of AmBev's net revenue, rose 17 percent, contributing to 17 percent increase in revenue from beer sales there, the company said.

AmBev's Brazil beer market share rose to 67 percent by the end of September from 66 percent a year earlier. Investment in promoting its brands caused a 59 percent surge in consolidated selling general and administrative expenses, which increased 59 percent to 863.1 million reais from 542.6 million reais a year earlier.

The acquisition of AmBev by Belgium's Interbrew, announced in March and completed in August, leaves the brewer in control of the Canadian brewer Labatt. AmBev consolidated one month of Labatt earnings into its third quarter earnings.


06 November, 2004