Grupo Modelo has cut its domestic sales volume outlook for this year. The Mexican brewer, half-owned by Anheuser-Busch, blamed the reduction on the lack of an economic recovery and poor weather where there had been heatwaves last year.

Speaking yesterday, CEO Carlos Fernandez said: ""I would say that between 1% and 2% is reasonable ... of additional volume," cutting the outlook from a previous forecast of growth of between 2% to 3% in Mexico, where Modelo sells 70% of its beer.

Fernandez also said, however, that Modelo expects full year profits "far above" last year after price increases in Mexico and the US, its top export market. Fernandez would not give a definite profit outlook for this year.

Despite having no debt and US$1 bln available to spend, Fernandez said the company has no plans for an "incoherent" acquisition spree. "Do you want me to buy another company so my operating margin goes down, my dividend yield drops? There is no coherence. We are boring because we are coherent," he said.

Fernandez said second-quarter results would be good. "It has not been as good as we would have wanted for the reasons I have laid out," he said. "We go to our sales points and we see that there is no (economic) recovery in a complete sense especially in the areas where we are present. Jobs have not been coming through and therefore the buying power of people has been limited."

Fernandez said that he expected exports to end 2004 above last year's 11.8 m hectolitres. The US, where Corona is the No. 1 import brand, takes almost 90% of Modelo's exports.

"We have markets that are responding very well, the American market is obviously very relevant, very good in Canada, very good in Australia, very good New Zealand, very good Europe, Britain, very good Africa, very good Russia," he said.