Brewer InBev 4Q profit more than doubles

InBev SA, the world's largest brewer and the maker of Stella Artois, Beck's and Brahma, said Thursday its fourth-quarter profit more than doubled as it increased sales across all regions except its home base in Western Europe.

Chief Executive Carlos Brito also dismissed recent rumors of exploratory negotiations on a merger with rival Anheuser-Busch Cos., saying the company tended more toward emerging markets.

Net income for the three months ending Dec. 31 rose to 371 million euros ($490 million), from 165 million euros in the same period a year earlier when the company was hit by restructuring costs but just short of analysts' forecast of 374 million euros.

Revenue rose 8.2 percent to 3.59 billion euros ($4.74 billion). Sales rose 10 percent in Latin America, where the company sells more than half its beer, charging far less than Western Europe, where sales were down even though cost savings allowed a slight rise in revenue.

InBev continued its push into emerging markets in Central and Eastern Europe, including Russia, and Asia where it bought China's Fujian Sedrin brewery last year, making it one of China's biggest brewers.

Brito said the company was always keeping on eye on expanding in Russia, China, South America and Germany _ and considering entering India.

North America bounced back with higher sales, even before the company started a distribution deal with Anheuser-Busch that will push premium brands Stella Artois, Beck's, Bass and Hoegaarden in a market where it hasn't made much money in the past.

Since Feb. 1, InBev is distributing its European premium beers in the United States on Anheuser-Busch's network, a move that should boost sales and give both companies products that compete with imports and micro-breweries.

Brito refused to say what kind of sales they were expecting but was upbeat about that deal and other Anheuser partnerships in Canada and South Korea: "It's a great fit. They are very committed to making it work."

Stella Artois, which saw U.S. sales climb 60 percent last year, has not yet reached a top ten list of U.S. imported beers maintained by Benj Steinman's Beer Insights newsletter _ but the beer analyst said the company is likely to see "accelerated growth" from the Anheuser deal.

"Anheuser-Busch's distribution network is very hungry to sell imported brands and Stella has had a very strong growth trajectory," Steinman said.

InBev is now concentrating on high-value imports after selling off Rolling Rock to Anheuser last year.

Selling more beer in emerging markets is shielding the company from poor results in Western Europe, where people are drinking less overall and turning to wine or spirits. Volumes in the region fell 1.9 percent in the fourth quarter and 0.5 percent over the full year.

In Western Europe where InBev draws 27 percent of its revenue, the company said it was depending on innovative versions of its beers _ high, low and caffeinated spin-offs _ and further budget tightening to improve results. But it still faces serious problems in Britain, where Stella sales collapsed by half, with InBev blaming a consumer trend toward lower-alcohol beers.

Latin America, now InBev's largest market with 37 percent of revenue, provided another good year as AmBev grew in Brazil and the company raised its stake in Argentina's Quinsa.

InBev said it would also focus on overcoming its "many challenges" in the Asia-Pacific region, where margins shrank in South Korea.

The company also warned of higher commodity prices next year, rising costs for aluminum and glass for packaging and sugar, malt and barley for beer as it renegotiates supply contracts. This could add 120 million euros to 130 million euros ($158.5 million to $171.7 million) to costs, it said, claiming its savings plan would offset this.

The company said it reached a 2004 target to make earnings come in at 30 percent of sales a year earlier than planned, reporting a 31.9 percent EBITDA margin that makes it one of the most profitable brewers.

InBev shares gained 2.8 percent to close at 51.50 euros ($68.07) in Brussels, as analysts said the results came in above estimates.

Full-year profit rose 56 percent to 1.41 billion euros ($1.86 billion), with the company saying that saving plans are cutting the cost of selling beer. InBev said this helped it improve its margins while it increased worldwide volumes by 5.9 percent over the year while revenue rose 7.9 percent to 13.3 billion euros ($17.57 billion).

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