BRAZIL: Higher beer prices boost AmBev in H1
- H1 net profits rise by 24% to BRL3.95bn (US$2.41bn)
- Net sales increase by 5% to BRL12.37bn
- Operating profits (EBITDA) up by 9.5% to BRL5.67bn
- Brewer suffers weaker volumes in Brazil as consumers trade down to cheaper beers
AmBev survives weak half-year in Brazil
AmBev has said that it lost market share in its key Brazil market in the first half of 2011, but higher prices and lower costs have ensured that profits continued to rise.
AmBev's beer sales slipped by 1% in volume for the six months to the end of June and by 2.6% in the second quarter, it said today (11 August). The Anheuser-Busch InBev-owned brewer was hit in its home market by consumers trading down to cheaper beers, as well as a tough comparative figure due to the FIFA World Cup being held in the same period last year.
The news that AmBev's market share was down by 1.6 percentage points in the second quarter may hearten Kirin Holdings as it seeks to take control of Brazil's second largest brewer, Schincariol. That said, AmBev remains dominant in its home market and it countered that, on a month-to-month basis, it has consistently gained market share since February.
Meanwhile, price rises in Brazil helped the Brahma lager brewer to increase group net sales by 5% for the half-year, to BRL12.37bn. AmBev's CEO, João Castro Neves, said that he still views Brazil's beer market weakness as short-term and added: "We were able to increase our EBITDA margin mainly as a result of our pricing strategy and cost management initiatives.”
AmBev's group EBITDA rose by 9.5% on the first half of 2010, to BRL5.67bn, while net profits, which were given an extra boost from lower interest costs, increased by 24% to BRL3.95bn.
Castro Neves said: "Overall, we had a quarter in which we registered important margin expansion in order to compensate for a lower revenue growth driven by a softer industry in most regions where we operate. We are also adjusting our cost base for a tougher year in volumes."
He said that AmBev still plans to invest BRL2.5bn in its domestic operations this year. An expected 7.5% real-terms increase in Brazil's minimum wage should boost beer sales in early 2012, he added.
Elsewhere, Labatt in Canada continued to cause AmBev difficulties, with the division's volumes down by 8% for the half-year and net sales down by 9%, to BRL1.67bn.
In the second quarter, AmBev's net profits rose by 20.8% to BRL1.84bn, with net sales up by 2.3% to BRL5.81bn. EBITDA rose by 7% to BRL2.58bn.
For the company's announcement, click here.
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