GLOBAL: Brazil, Russia, China drag on InBev Q1 volumes

By Dinushi Wijewardena | 8 May 2008

InBev has reported that weak performance in three out of four BRIC countries has brought total volumes down in the first quarter of 2008.

The company, which announced its results for Q1 today (8 May 2008), claimed that low beer sales in Brazil, Russia and China brought volumes down -0.4%.

Brazil saw a 1.9% volume dip, due to poor weather in the summer, an early Carnival which shortened the summer holiday period and high food inflation. InBev said it was confident, however, that the Brazilian market would see a resurgence, stating that last month showed volumes to be 3.1% higher than the same month a year earlier.

Volumes in Russia were down 11.4%, driven mainly by the decline in the low-price beer segment. Growth in the core, premium and super premium segments was reportedly healthy however, nearly offsetting the decline in the low-price segment. The overall negative performance in Russia nevertheless brought volumes in the entire Central and Eastern European region down by 5.7%.

InBev's volumes in China were also down, by 3.8% in the quarter. This reflected a negative performance in the Asia Pacific region overall, where volumes were down 2.4% compared to growth of 6.6% in Q1 2007. South Korea managed to buck this trend, however, with the brewer recording volume growth in the country of 2.6% above Q1 2007 in the country, thanks largely to the growth of the Cass brand.

Despite growth in both the UK and Germany,Western Europe was down 1.2% as a consequence of reducing third-party and lower-value products; although own-beer sales were up 0.6%. Latin America South saw growth of 10.0%, with premium brands, including Stella Artois in Argentina, performing well.

Despite the volume dip, however, the company's total revenue was up 4.8% year-on-year, to EUR3.19bn (US$4.89bn). Normalised EBITDA was flat for the quarter, inching up 0.7% to EUR982m.

"InBev's long term business model is based on driving volumes ahead of the industry and revenue ahead of volumes while keeping tight control of expenses," the company said. "The results achieved in 1Q08 do not represent any departure from this model, but merely reflect softer industry volumes predominantly in Brazil and an unfavourable cost of sales comparison with the first quarter of last year."

Sectors: Beer & cider

Companies: InBev

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