Pricing keeps Grupo Modelo beer sales afloat

Pricing keeps Grupo Modelo beer sales afloat

Higher pricing helped Grupo Modelo to increase net sales for the first half of 2010, while net profits leapt by more than 50% for the period due to lower financing costs.

Net sales for the six months to the end of June rose by 3.6% to MXN40.78bn (US$3.2bn), compared to MXN39.37bn in the first half of 2009, Modelo said today (23 July).

Price rises in Mexico and on beer sold abroad helped the firm to offset a 2.4% drop in beer volumes for the period. Domestic beer volumes fell more steeply, by 2.7%, than export volumes, which fell by 1.7%, said the Corona brewer, which is Mexico's largest beer producer.

Net profits jumped by 59% on the first six months of last year, to MXN5bn from MXN3.1bn, due to lower charges, said the firm, in which Anheuser-Busch InBev has a 50% non-controlling stake.

However, operating profits fell by 2.6% to MXN10.7bn, due to higher costs and the effects of a strike during the half-year at the Tuxtapec brewery.

"The company's financial position remained strong with no long-term debt," said Modelo.

It attributed the slip in domestic volume sales to poor consumer confidence in the first quarter of the year, together with a tax rise on beer. Domestic volumes for the second quarter fell by just 0.2%.

But, export volumes fell faster in the second quarter, by 3.5% on the same period of 2009, said the firm, which operates the Crown Imports joint venture with Constellation Brands in the US.

Modelo's group net sales for the second quarter rose by 3.6% to MXN23.2bn.