Brazilian rains dampen an upbeat AB Inbev

By Guy Montague-Jones

- Last updated on GMT

Related tags: Ab inbev

Persistently high unemployment rates in the US and heavy rains in Brazil are expected to dampen AB InBev volumes at the start of 2011.

Publishing its end of year results, the biggest brewer in the world said first quarter volumes are likely to be soft but better figures are anticipated later in the year.

Outlook

The rains in Brazil will undoubtedly pass letting high economic growth feed demand for beer. In the US, where shipment volumes fell 3 per cent in 2010, recovery may be harder to achieve. Nonetheless, management is optimistic that the sales picture will improve.

“In our largest market of the United States there are early signs of a reduction in unemployment levels. If sustained, we believe this would improve consumer confidence, positively impacting the beer industry.”

Like other food and drink manufacturers AB InBev expects to come under pressure from higher raw material costs in 2011. It is predicting cost of sales per hectoliter to increase by low single digits this year.

The brewer plans to mitigate global commodity cost increases through its hedging strategy, procurement savings and efficiency gains.

AB InBev was formed two years ago from the merger of Anheuser-Busch and InBev. Integration is now essentially completed but the brewer still expects to exploit further top-line opportunities and share more best practice. Management said this could bring total synergies beyond its $2.25bn commitment.

2010 highlights

Over the past year, highlights include double-digit growth in Brazil where AB InBev now commands a 70 per cent market share. But heavy rains at the tail end of the year did mean that Q4 growth dropped to 3.4 per cent.

At the same time, the declines in North America, AB InBev’s biggest region, eased towards the end of the year. Q4 volumes fell 1.3 per cent while full year volumes decreased 3.1 per cent.

Overall revenue in 2010 grew 4.4 per cent to $36.297bn helping the company achieve double digit increases in operating profit. An additional $620m in synergies from the merger in late 2008 contributed to a 39 per cent jump in net profits to $1.219bn.

Related topics: AB InBev

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