MEXICO: Sales stall, profits slip at Grupo Modelo in Q2

28 July 2008 | Source: just-drinks.com editorial team

Grupo Modelo has posted a slide in profits for its second quarter, with sales stagnating in the three-month period.

The Mexico-based company, which owns the Corona beer brand, said late last week that net sales in the three months to the end of June inched up by only 0.4% on the corresponding period a year earlier, reaching MXN20.41bn (US$2.03bn). While sales in its domestic market rose by 3.9% to MXN10.29bn, exports slipped by 1.5% to MXN8.78bn. The company blamed the appreciation of the Mexican peso against the dollar for the slide.

Operating income in the quarter fell by 10.9% to MXN5.82bn, while net majority income was down by 18.1% to MXN2.57bn.

In volume terms, however, domestic sales were up by 3.1% in the quarter to 9.8m hectolitres, while export volumes were up by 3.8%. Cost of goods sold rose 8.6% as a consequence of higher raw materials and energy prices.

For the first six months of 2008, net sales for Modelo were down by 0.9% to MXN36.56bn, pulled down by a 6.5% fall in export sales, which totalled MXN15.01bn. Operating income was down by 10% to MXN10.26bn, with net majority income falling by 17% to MXN4.65bn.

The company noted that cost of goods sold rose 3.6% in the half-year, mainly because of higher raw materials and energy costs. Operating expenses increased 2.5% as a result of marketing and distribution expenses in both Mexico and the US.

Grupo Modelo is 50%-owned by Anheuser-Busch, although the US brewer's stake is non-controlling.