• Profits fall against disposal gains in '09
  • Brazil propels like-for-like beer sales
  • Hints at exceeding synergies target
Anheuser-Busch InBev thanks Brazil for higher beer sales

Anheuser-Busch InBev thanks Brazil for higher beer sales

Anheuser-Busch InBev has reported a drop in full-year profits, but a rise in like-for-like beer sales thanks to strong demand in Brazil.

Net profits for the 12 months of 2010 fell by 12.7% to US$4bn, Anheuser-Busch InBev said today (3 March). It blamed the drop on a tough comparative figure in 2009, when the Budweiser brewer benefited from one-off gains related to assets disposals.

The group's net sales also dipped, by 1% to $36.3bn, due to the lack of contribution from businesses divested during 2009, such as the bulk of A-B InBev's Eastern Europe brewing assets and Oriental Brewery in South Korea.

Excluding those businesses, A-B InBev's net sales for 2010 rose by 4.4% versus 2009 on an organic basis, to $36.76bn. Underlying net profits, meanwhile, rose by 28% for the year if one-off items are excluded, to $5bn.

"Our financial results for 2010 showed very good progress in spite of the persistent challenging economic environment in several of our markets," said the Belgium-based brewer. "It is important to emphasise that brand health and topline growth are, and will remain, our top priorities," it added.

Strong demand for beer in Brazil helped A-B InBev to forget about weak beer sales in much of North America and Western Europe during 2010. Group beer volumes rose by 2% for the year, with volumes up by 10.5% in its Latin America North business. By contrast, volume sales fell by 3% in North America and by 1.6% in Western Europe.

However, there are signs that the general beer market decline in North America has slowed, with A-B InBev's volume sales slipping by just 1% in the fourth quarter of 2010.

The group's share price rose by 3% following its results announcement and the firm hinted that it may exceed its synergies target following InBev's $52bn takeover of A-B in late 2008.

"In terms of Anheuser-Busch integration synergies, in 2011, we are expecting to deliver at least the additional $270m bringing total synergies to our commitment of $2.25bn," the brewer said.

Looking to the future, A-B InBev said that it only expects low single-digit rises in sales costs in 2011, adding that it is well-hedged against commodity cost increases. The company plans to increase capital expenditure to between $2.7bn and $2.9bn in 2011, up from $2.1bn in 2010, as it seeks to expand capacity in emerging markets.

The group remains committed to reaching a net debt to EBITDA ratio of two by 2012. The ratio was 2.9 at the end of 2010.

For the full announcement, click here.