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AB InBev Brews 75-Percent Profit Increase

Mon, 04/30/2012 - 10:06am
GABRIELE STEINHAUSER,AP Business Writer

BRUSSELS (AP) — The world's biggest brewer Anheuser-Busch InBev NV said Monday its first-quarter net profit jumped 75 percent thanks to lower financing costs and taxes as well as bigger beer sales.

Net profit rose to $1.69 billion between January and March from $964 million a year earlier, after a sharp drop in financing costs as well as declining taxes. AB InBev's chief financial officer, Filipe Dutra, said the company was benefiting from growing profits in countries like Brazil, where the tax rate is lower than in Europe and the U.S.

Revenue meanwhile increased 3.7 percent to $9.33 billion, as strong sales in Latin America and Asia offset falling sales in Europe.

In the U.S., beer sales improved due to the hot weather on the East Coast and in some of the central states as well as a decline in unemployment. However, AB InBev warned that sales may fall in the second quarter as it squeezed more shipments into the first quarter to avoid higher transport costs in the summer.

At the same time, it said an increase in the minimum wage in Brazil should support beer volumes — and profit margins — there.

Ever since Leuven, Belgium-based InBev bought U.S.-based Anheuser-Busch in 2008, the company has been trying to get consumers to trade up to its more expensive brands such as Budweiser, Stella Artois, and Beck's, in order to boost its profit margins.

As part of that effort the company has been promoting Anheuser's star Budweiser brand across the globe, including through major sport sponsorship agreements.

In the first quarter, global Budweiser volumes jumped 7.3 percent thanks to growing sales in China, Canada, Russia, and the U.K., where Budweiser sponsors the popular FA Cup. The beer has also started to be rolled out in Ukraine in the second quarter, since the country will co-host the European soccer championship this summer.

AB InBev said Budweiser was exceeding expectations in Brazil, where it was launched just last August.

Global Stella Artois sales, meanwhile, grew 1.3 percent, largely on the back of big increases in the U.S. and Brazil. AB InBev's attempt to sell more Beck's beer outside its home market Germany, however, was less successful, with global sales falling 4.2 percent in the first quarter.

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