BELGIUM: InBev “far from satisfied” with year so far

InBev has posted a lift in first-half sales and profits, despite flat volumes for the period.

The Belgium-based brewer, which last month secured the acquisition of Anheuser-Busch, said today that normalised EBITDA for the six months to the end of June rose by 2.9% year-on-year to EUR2.22bn (US$3.31bn). Operating profit registered a 1.3% increase to EUR1.67bn, as sales rose by 4.6% to EUR6.91bn. Volumes, however, inched up by only 0.2% to 127.5m hectolitres, driven by an 11.3% jump in volumes in Latin America South.

While volumes in North America were up by 1.8% in the half-year, own beer volumes in Western Europe continued to struggle, dipping by 0.5% thanks to "lower volumes despite stable to higher shares in all markets". In Russia, however, InBev saw its volumes fall by 9.2% as "solid growth" of core and premium brands failed to offset lower volumes of lower priced brands. In Latin America South, volumes were up by 11.3% during the first six months of 2008.

For the second quarter, normalised EBITDA was up by 4.7% on the corresponding period a year earlier to EUR1.24bn, with operating profit climbing by 3.1% to EUR960m. Sales climbed by 4.5% to EUR3.71bn with volumes up by 0.7% to 68.4m hectolitres.

The company said it was "far from satisfied" with its performance in the year so far, but noted that its second quarter had performed in line with expectations.

"Our 2Q results were better than 1Q, as anticipated, but still below our aspirations," said InBev's CEO, Carlos Brito. "The main market where we have underperformed so far this year has been Russia, where our value and price brands have lost share at a faster pace than we have been gaining share with our core and premium brands, as evidenced by net sales per hectolitre growth of 12%.

"Our overall pricing is healthy, but rising costs continue to put pressure on our margins," Brito added.

Looking forward, Inbev warned that this year will provide "greater challenges to overcome than there have been over the past three years". The company maintained, however, that it expects to achieve EBITDA margin expansion for the full-year.