just On Call - Anheuser-Busch InBev plays down M&A speculation
Carlos Brito says debt, topline are main focus in 2011
Anheuser-Busch InBev's CEO, Carlos Brito, has calmed speculation that the brewer could return to the acquisition table in 2011.
Brito said that the brewer's main priorities this year are cutting debt and expanding sales within the group's existing portfolio of beers.
There had been speculation before the brewer's full-year results statement today (3 March) that strong progess on cutting debt and better-than-expected synergies from InBev's US$52bn takeover of A-B has put the Budweiser brewer back in the frame for acquisitions. Earlier this week, Brito himself appeared to encourage the speculation by telling German newspaper Welt am Sonntag that the group is seeking to "actively take part in consolidation in the industry".
However, today, Brito told analysts on the firm's results conference call: "Right now, we are leveraging the scale that we obtained after the A-B transaction.
"We feel right about the portfolio of brands that we have and the countries that we operate in," he said. "There is lots to be done with the current business we have at hand."
The Belgium-based brewer, he said, is focussed on reaching a net debt to EBITDA ratio of two by 2012 and the company is not considering next steps until that point. The ratio was 2.9 times at the end of 2010.
At the same time, A-B InBev is keen to improve its topline performance. Organic net sales rose by 4% in 2010, to US$36.76bn, but the group relied on a 10% rise in volume sales in Brazil to offset low single-digit declines in North America and Western Europe.
The company is particularly keen to expand Budweiser's global consumer appeal. The brand's volumes rose by 1.7% in 2010, boosted by its sponsorship of the FIFA World Cup, and it increased its market share in the UK, China and Canada.
In terms of synergies, A-B InBev hinted that its total syngeries from the InBev, A-B merger could surpass its target of $2.25bn. It will achieve "at least" this figure, the group said today.
For 2010, A-B InBev's net profits fell by 12.7% to US$4bn. However, stripping out one-off items in both 2009 and 2010, underlying profits for last year rose by 28%.
A ruling on Kronenbourg 1664 by the UK's advertising watchdog has the potential to set a precedent for marketeers of home-brewed 'foreign' beers....
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