Asia Pacific Breweries has seen its investments in new breweries take a chunk out of its third quarter profits.

The company, which is 42%-owned by Heineken, said today (10 August) that profit before interest and tax (PBIT) slipped by 5.9% in the three months to the end of June, falling to SGD61.3m (US$40.2m). Organically, PBIT rose by 22.3%, the company noted, hitting SGD10.7m.

For the nine months of its fiscal year so far, PBIT was up by only 3% to SGD210m.

In regional terms, APB saw volumes rise and commercial expenses fall in New Zealand, where volumes grew by 18%. In Malaysia, however, PBIT fell by 14% thanks to higher commercial spending and overheads.

In the Chinese market, volume growth leapt by 19%, but PBIT plunged by 34% due to higher marketing expenditure and operating expenses.

Company CEO Koh Poh Tiong highlighted the "gestation losses from our recent investments and new start-up breweries" for the dilution in earnings. "Nevertheless, we expect our earnings rates to improve when we consider the potential of these regional investments, as was the case with our first phase of regionalisation which began over a decade ago.

"Fundamentally, our business remains sound and we have continued to deliver stronger organic growth rates, driven mainly by our overseas operations."

APB's performances outside its domestic market today contributes more than 80% of group earnings.

In June, the brewer commissioned MCS-Asia Pacific Brewery to begin brewing its Tiger beer brand in Mongolia. Located in Ulaanbaatar, the brewery occupies 5 hectares and is currently equipped with an annual production capacity of 120,000 hectolitres.

APB now owns interests in 32 brewery operations in 11 countries in the Asia Pacific region. APB's brewery count will add up to 35 in 12 countries as new breweries come on stream in China, India and Laos by 2008.