BRAZIL: AmBev sees FY lifted by price rises, cost savings
- Full-year net profits rise by 14.3% to BRL8.64bn (US$4.9bn)
- Net sales rise by 7.5% to BRL27bn
- Operating profits (EBITDA) up by 13.6% to BRL13.2bn
- Volumes struggle but momentum set to improve in 2012
AmBev expects Brazil beer sales to improve in 2012
Beer price rises and cost savings helped AmBev to increase net sales and profits in 2011, despite weak demand for beer in its native Brazil.
AmBev's volume sales were broadly flat for the 12 months to the end of December, reflecting slower consumer demand for beer in Brazil. Group volume sales in the country were broadly level with the previous year, said the firm, which is owned by Anheuser-Busch InBev.
However, AmBev, which accounted for 69% of beer sales by volume in Brazil in 2011, expects things to improve in 2012 thanks to a 7.5% increase in the national minimum wage. It also plans a capital spend of BRL2.5bn (US$1.4bn) in the country over the course of the year, some of which will be used to attack the northeast stronghold of Brazil's second largest brewer, Kirin Holdings-owned Schincariol.
For 2011, AmBev offset sluggish beer demand with price rises and cost savings. Net sales for the 12 months rose by 7.5%, to BRL27bn, while EBITDA was up by 13.6% on 2010, at BRL13.2bn, and net profits increased by 14.3% to BRL8.64bn.
AmBev's CEO, João Castro Neves, acknowledged that 2011 was largely about expanding profit margins, but he added: "We continued to invest behind our brands and innovation, reaching all-time high market share in our Brazil CSD operations, a step change in international premium with Stella Artois growing 215% and Budweiser launched in August 2011."
The fourth-quarter saw AmBev increase its momentum on all fronts. Total group volumes rose by 0.9%, with beer volumes specifically up by 1.3%. Meanwhile, net sales jumped by 12.4% to BRL8.4bn, with EBITDA up by 19.6% to BRL4.5bn and net profits for the three months up by 17.3% to BRL3bn.
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