Brewer posts profit hike

InBev, the world's second-largest beer producer by volume, reported a 16.5 percent like-for-like rise in 2007 core profit yesterday, beating expectations, but said it faced greater challenges in 2008.

The brewer, whose key brands include Stella Artois, Beck's and Brahma, said EBITDA (earnings before interest, tax, depreciation and amortization) came in at 4.99 billion euros, against the average 4.90 billion euro forecast from a Reuters poll of 15 analysts.

InBev, which disappointed investors for the first time in 10 quarters in the July-September period, said strong Brazilian demand and a healthy performance in Eastern Europe had provided the foundation for solid results.

InBev said it was committed to expanding its EBITDA margin, but gave no forecast.

It noted that strong growth in the first half of 2007 would mean challenging comparisons for the first six months of this year, especially in the first quarter.

"In summary, we recognize that in 2008 there will be greater challenges to overcome than there have been over the past three years," InBev said in a statement.

World number four Heineken spooked the market last week when it failed to give a clear 2008 forecast and warned of rising costs for malted barley and packaging.

InBev said its consolidated costs of sales per hectolitre should move in line with the 4 percent average inflation in the countries to which it was exposed after moving below inflation in 2007.

The company's rivals have mentioned input cost inflation between 8.5 and 15 percent this year and said that price rises of around 2 to 5 percent may be necessary.

InBev said it was adapting its dividend policy by removing the current maximum 33 percent payout ratio.

Shares in the company have come down 20 percent since it reported third-quarter figures, though they are only 7 percent off in the year to date.

The DJ Stoxx food and beverage index has dropped 9 percent this year.

Agencies

(China Daily 02/29/2008 page17)