BELGIUM: Interbrew interim profits falls 18%

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One-off charges have hit Belgian brewer Interbrew in its interim results. The company said that first-half net profit fell 18% to €165 million from EUR202m in the same period last year.

EBITDA, EBIT were also down 12.1%, 26.7% respectively.

Interbrew's net profit was hurt by the sale last December of Carling Brewers to Adolph Coors, and a €61m write-down to cover costs from a distribution deal with Tradeteam, a unit of Exel PLC of the UK.

Sales fell 1.8% to €3.417 billion from €3.48 billion, in line with expectations. Interbrew said it had been hurt also by poor weather in Russia and a legal battle with its business partner, Mexico's second-ranked brewer Fomento Economico Mexicano SA (FMX), or Femsa.

Femsa has obtained a US court ruling preventing Interbrew from selling its leading brand Beck's through the Labatt USA distribution network. The Belgian brewer is appealing the ruling, but it isn't clear when it will be able to take advantage of Labatt's large distribution channels.

"The first half of the year was characterised by underlying business growth, despite capacity constraints in Russia, and the non-integration of Beck's in Labatt USA," Interbrew said.

"The uncertainty resulting from the delay in the integration process has had a negative impact on Interbrew's sales performance. In the first half, distributor depletions were off 4% nationally, but they did improve in July and August."

In Western Europe, a region with low or declining market growth, Interbrew realised a 1.7% organic volume growth and 2.3% organic net turnover growth. Organic EBITDA grew 9.3%, thanks to a combination of price and mix improvements, plus good cost management. Market shares have been stable or growing in all countries

In Emerging Markets, organic volume growth of 2.7%, plus mix improvements; have led to an organic net turnover growth of 6.5%. "Strong sales growth in the core segment was achieved in the Czech Republic, Hungary and Croatia. This strong growth helped offset weaker performances in Bulgaria, Romania and Montenegro, where difficult economic conditions have brought on a shift towards the value segment," the company said.

Looking ahead, Interbrew said Interbrew remains on track to meet its long-term objectives and reiterates its target of double-digit, average annual growth in EPS before goodwill amortisation, from 2000 to 2004, irrespective of scope changes.

"Poor weather conditions in Western and Central Europe, combined with the investments we made in long-term sustainable growth, lead Interbrew to target an EPS pre-goodwill and pre-restructuring of €1.50 for the current year," it said in a statement.

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