Mexico's leading brewer Grupo Modelo, which is part owned by Anheuser-Busch, has disappointed by reporting flat net profit in the first quarter, as increased advertising costs put a dampner on increased revenues from exports.

Net profit reached 998 million pesos in the first quarter as exports increased 7.2% in value. The increase though came from a depreciation in the peso and export volumes fell 7.8%.

The market had expected an increase in profits of 6% but higher operating costs to promote Modelo's beers, took their toll.

"Operating expenses were up 5.2 percent, mainly on the spending on publicity materials for sales points," Modelo said in a statement.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 6.4% percent in the first quarter from the year-ago period. Meanwhile operating profit, or earnings before interest and taxes, rose 7.9%, helped by better control of production costs, opportune purchases of commodities and general operating improvements, Modelo said.

Sales rose 1.9% thanks to higher prices introduced early last year although overall volumes fell 1.5%.

"The decline in the export market is because of a difficult comparative base, given that in the same period a year earlier prices were increased for the North American market, which lead to a build up of inventories in the distribution channels of Modelo's products in the United States," the company said.