Anheuser-Busch InBev, the world's largest brewer, said it has had a challenging start to 2010 with US volumes under pressure after unveiling mixed fourth-quarter earnings buoyed by a sharp increase in Brazilian sales.
The maker of Budweiser, Stella Artois and Becks said today it expected to sell slightly more beer this year than last, but that profit growth would be only a single-digit percentage in the first quarter before increasing through 2010.
In the first three months in particular it would face tough comparisons with a strong US performance last year, exacerbated by bad weather in the first months of 2010, and lower Russian sales because of fourth-quarter stocking ahead of a tax hike.
Sales, marketing and administrative expenses would be higher year-on-year in the first half.
"We see no improvement in the operating environment today," chief financial officer Felipe Dutra told a conference call, adding that the company was stronger now that the "distraction" of its post-merger divestment programme was behind it.
"For the full year we expect beer volumes to be in positive territory," he said.
AB InBev shares fell as much as 4 per cent to 36.32 euros in early trading, making them among the weakest in the FTSEurofirst 300 index of leading European stocks. By 08.50 Irish times they were down 3.7 per cent. They are now barely changed in the year to date compared with a 4 per cent rise in the Eurostoxx food and beverage index.
Analysts said the weakness was due to lower-than-expected core profit (Ebitda) in the fourth quarter, with debt reduction and savings to date already priced into the shares.
The company said it sold some 2 per cent less beer in the fourth quarter in the United States, where it has about half of the market, but achieved higher prices and cut costs.
Strong sales in key market Brazil, where AB InBev pushed its market share to 70 percent, and the strength of that country's real currency were behind a 5.1 per cent hike in group sales, more than the market had expected.
The company's much-watched core profit (Ebitda) rose an underlying 11.5 per cent to $3.11 billion in the fourth quarter.
AB InBev said it achieved $235 million of savings in the fourth quarter from the 2008 merger of Belgium's InBev and US Anheuser-Busch, bringing the full-year total to $1.11 billion.
The company had a 2009 savings target of $1 billion and $2.25 billion by 2011. It kept this forecast, although some analysts had expected the brewer to set its sights higher.
Recession-hit consumers in mature, developed-world markets bought less beer last year but stomached higher prices. Brewers with greater emerging-market exposure registered gains and all focused on squeezing out savings.
AB InBev, with a 50:50 developed to emerging market split, sold 0.7 per cent fewer drinks last year, but 1 per cent more in the fourth quarter.
Heineken, with some 70 per cent of its profits from Europe and North America, reported a 6.7 per cent drop in volumes in the fourth quarter, but Carlsberg's volumes stayed unchanged after declining in the first nine months..
Underlying beer volumes were also flat for SABMiller, the world's second biggest brewer.
InBev bought rival Anheuser-Busch for $52 billion, raising $9.8 billion from a rights issue late in 2008 and $9.4 billion from divestments during 2009, bringing net debt to Ebitda down to 3.7 times from 4.7 at the end of 2008.
Reuters