Asia Pacific Breweries has reported a slight lift in profits, despite slowing sales in its second quarter.

The company, a joint venture between Fraser & Neave and Heineken, said today (7 May) that net profits for the three months to the end of March increased by 5.8% year-on-year, coming in at SGD46.2m (US$31.5m), while sales dipped by 0.6% in the quarter, totalling SGD484.88bn.

Operating profits in the period inched up by 0.7% to SGD81.5m.

For the company's first fiscal half-year, net profits were up by 9.6% at SGD94.5m, with sales rising by 0.9% to SGD1.07bn. Operating profits increased by 3.4% to SGD168.5m.

While APB boasted of healthy volumes in its home market of Singapore, up by 2% in the second quarter, the company warned that trading conditions in New Zealand, where volumes fell by 2%, are "not expected to improve in the short-term".

The increasingly challenging market conditions in the country, blamed on intense competition, falling consumption and higher packaging material costs, saw Profit Before Interest, Taxation & Exceptional Item (PBIT) plunge by 78%.

Volumes in India and Sri Lanka were up by 28% in the quarter, although political unrest and restrictions on alcohol consumption and advertising hindered sales in Thailand, where volumes dropped by 16%.

"As expected, market conditions for the first half of 2009 were challenging and the beer sector remains highly competitive in most of our operating markets," said APB's CEO, Roland Pirmez. "Translation losses have also adversely affected profit levels during this period.

"However, notwithstanding the above, our markets, namely Indochina, Papua New Guinea and Singapore, recorded improved revenue and profit levels as compared to the same period last year."

The company noted that it remains in negotiations with Nantong Fuhao Alcohol Industry over the 49% stake sale in Jiangsu Dafuhao Breweries in China. The divestment, announced last year, hit the rocks earlier this year.

"Our balance sheet and our business fundamentals remain strong," Pirmez said. "We remain committed to our long-term vision of investing in the region to support future growth and improve our competitiveness."