Leuven, Belgium, Feb 28 - InBev, the world's second-largest beer producer by volume, beat expectations with a 16.5 percent like-for-like rise in 2007 core profit on Thursday and more than tripled its proposed dividend.
The brewer of Stella Artois, Beck's and Brahma said EBITDA (earnings before interest, tax, depreciation and amortisation) were 4.99 billion euros ($7.5 billion), against an average 4.90 billion euros forecast by 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's shares surged 9.3 percent to 57.85 euros by 1055 GMT and was the top gainer on Euronext Brussels. The DJ Stoxx European beverage index was up 0.6 percent.
InBev also said it was adapting its dividend policy by removing the current maximum 33 percent payout ratio and was proposing a dividend of 2.44 euros per share, more than three times higher than 0.72 euros a year ago.
It also announced plans to buy back up to 500 million euros of shares.
"The EBITDA figure was better than expected. The outlook they have said already... There is a significant rise in the dividend," KBC Securities analyst Wim Hoste said.
Other analysts commended the company on its cost-control.
Earnings in both Latin America and eastern Europe were above expections.
InBev recognised problems in China, where it has a number of joint ventures, and a 10.3 percent slump in UK volumes, mainly due to beer drinkers turning from Stella. The company said it would seek to address both issues.
GREATER CHALLENGES IN 2008
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.
"We recognise that there will be a greater challenge to overcome in 2008 than there has been in the last three years," Chief Financial Officer Felipe Dutra told a news conference.
World No. 4 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.
This was in line with what it said after the third quarter.
Its rivals have mentioned input cost inflation between 8.5 and 15 percent this year and said price rises of around 2 to 5 percent may be necessary. InBev said it would try to keep any price hikes below the level of inflation.
InBev said its new dividend policy would not stop it making acquisitions where it saw value, but gave little more away about consolidation that is sweeping the industry.
Chief Executive Officer Carlos Brito told a news conference that InBev could make a large acquisition if necessary, but declined to comment on market speculation of a possible tie-up with Anheuser-Busch, the maker of Budweiser.
"We are happy with our current footprint," he said.
InBev was working to take full control of one of its joint venture breweries in China.
Shares in the company have come down 13 percent since it reported third-quarter figures, though they are up 1 percent year-to-date. The DJ Stoxx food and beverage index has dropped 8 percent this year.