AB InBev makes 3Q profit, but revenue down 10 pct.

AP News
Posted: Nov 12, 2009 3:14 AM

The world's largest brewer Anheuser-Busch InBev SA said Thursday it made a $1.546 billion profit in the third quarter but that revenue fell 10 percent from last year, when the company was created in a merger, as beer sales shrank.

The maker of Budweiser, Stella Artois and Beck's did not give a figure for year-ago profit, saying it could not compare numbers from Anheuser Busch and InBev before they combined. In the July-September 2008 period InBev made $690 million and AB $666.1 million.

The combined company sold 3.1 percent less beer in the three months ended Sept. 30, hit by weak worldwide markets as the economic downturn held back spending. Revenue amounted to $9.76 billion, down from $10.89 billion before the merger.

AB InBev CEO Carlos Brito said it was now "a much stronger company" after tackling debt with the $9.4 billion sell-off of U.S. theme parks and a central European unit _ outpacing a goal to make $7 billion from divestments.

Paying off debt is still a priority, the company said, warning that it is still "selectively evaluating noncore assets" that could be sold off.

But it said it was no longer actively seeking to offload units and would "now focus all our efforts on growing our core business." Brito said this included new synergies not included in the $2.25 billion it plans to save from combining AB and InBev.

The biggest problem it faces is turning around flatter beer sales _ a problem other brewers also have.

SABMiller PLC, AB InBev's closest competitor and the maker of Grolsch, Peroni and Miller Genuine Draft reported that lager sales were down 1 percent in the six months ending Sept. 30. U.S. brewer Molson Coors said its worldwide beer sales fell 2.9 percent in the third quarter.

AB InBev says it expects volume sales to lift in the final three months of the year. It is trying to boost U.S. sales by launching two new beers there _ a low calorie beer Select 55 and a wheat beer aimed at older drinkers, Bud Light Golden Wheat.

U.S. and Canada volumes were down 4.7 percent in the third quarter, which the company partly blamed on strong Anheuser-Busch growth a year ago and lower sales to retailers.

Western Europe beer volumes slipped 1.2 percent, down more sharply by 7.1 percent in Germany. However the company grew volumes 3.7 percent in Britain thanks to a branding push that helped turn around Stella Artois, whose image was damaged by being linked to binge drinking.

AB InBev usually relies on stronger growth in emerging nations to outweigh lower European and North American sales _ well-established markets where customers have turned from beer to wine and spirits.

But apart from Brazil, where volumes grew 12.3 percent, AB InBev saw volumes fall in most developing markets. They were down 16.8 percent in central and eastern Europe _ especially Russia and Ukraine where drinkers turned to cheaper beer. Volumes fell 3.2 percent in Asia and 5.6 percent in Argentina and Chile.