6 Nov, 2008 - InBev, the world's leading brewer, announced today its results for the third quarter (3Q08) and 9 months (9M08) of 2008.
HIGHLIGHTS
Except where otherwise stated, the analyses below are based on organic figures and refer to 3Q08 versus the third quarter of last year:
§ Volume performance: total volumes grew 1.9% and our own beer volumes rose 0.8%. Soft drinks delivered volume growth of 13.8%. We leveraged our global platform with leading positions in key markets – to continue to drive volume gains.
§ M arket share gained or maintained: We have gained or maintained market share in 8 out of our top 10 markets (September ytd), as compared to last year. In the same period, we have gained market share in Argentina, Germany, Belgium, China, South Korea, Canada and the UK. In Brazil, our market share remains stable year to date (September).
§ Brand Focus Y ielding Results: Our decision to put greater focus on and investment in a fewer number of brands has produced encouraging results. Year to date (to September 2008), these brands have significantly outperformed total own beer sales, with volume growth of 4.4%. Recent examples are Stella Artois in the US, Beck’s in Germany, Cass in South Korea, Budweiser and Bud Light in Canada, and Quilmes and Stella Artois in Argentina. In particular, our global brands, Stella Artois and Beck’s, performed very well, growing 8.1%.
§ Brand Renovation and I nnovation: We continued to invest in brand building, increasing our spending on marketing and sales by 12.5% during the third quarter. Recent product renovation and innovation is expected to further improve the performance of our focus brands. Examples include Stella Artois 4% in the UK, Stella Artois Légère in Canada, new packaging for Beck’s globally, as well as innovations such as Beck’s Ice in Germany, Cass Lemon in South Korea and Hoegaarden Citron in Belgium.
§ Revenue Grow th: our total revenues grew 7.7% and revenues per hectoliter 5.7%, reflecting the improved product mix and revenue management activities implemented across our businesses.
§ Cost of Sales: Our total Cost of Sales (CoS) increased by 12.0% overall, 9.9% on a per hectoliter basis as a result of inflationary and commodities pressures.
§ Disciplined expense control: We are continuing our efforts to shift “nonworking money” into “working money”; i.e. focusing our spend on activities that directly relate to what our consumers “see, touch and enjoy”. Despite strong investments in our brands, overall operating expenses only increased by 5.0%.
§ EBITDA: Normalized EBITDA of 1 393 million euro grew by 6.5%, and normalized EBITDA margin for the quarter was 35.3% compared to 35.2% in the same quarter last year on a nonorganic
basis. On an organic basis, i.e. after eliminating the effects of currency translation and scope changes (in both Revenue and EBITDA), EBITDA margin decreased 40bp.
§ Earnings per share grow th: Normalized EPS was 0.91 Euro, representing an absolute growth of 7.1%.
§ Better W orld Commitment: On September 16, we launched our 2008 Citizenship Report outlining our results and efforts on the four foundations of our “Better World Commitment”: Economic Value, Responsible Drinking, Environment and People.
§ P eople: Pursuant to our strategy of promoting, attracting and retaining top talent, we have appointed 139 new “partners” in 2008, thereby making 139 new members of our top talent pool to receive shares as part of our long term retention program.
§ AnheuserBusch Combination: The combination with AnheuserBusch is on track to close by the end of the year, pending approval by AnheuserBusch shareholders and receipt of remaining regulatory approvals. The InBev shareholders’ meeting approved the transaction on September 29, 2008, and regulatory clearances have been obtained in a number of jurisdictions. In addition, we have successfully completed primary syndication of our recently arranged debt facility, and remain committed to maintaining an investment grade credit rating. As a consequence of unprecedented volatility in the global capital markets, our Board decided to postpone our previously announced capital increase until market conditions stabilize. Such postponement will have no impact on the timing of closing of the combination with AnheuserBusch.
Carlos Brito, CEO, commented: “Our team’s commitment to topline growth and disciplined cost management remain key priorities for achieving sustainable longterm results. We believe we are equipped for the coming challenging economic environment: not only has the beer business generally shown resilience in tough times, but we also operate with a lean structure with great geographic diversification between emerging and developed markets.
"We also look forward to closing our combination with AnheuserBusch, which will increase our exposure to the U.S., a “mature” yet growing market. In addition, we will be able to expand the Budweiser brand globally and strengthen the presence of our global brands Stella Artois and Beck’s in the U.S. Our focus for the newly combined company will be threefold: (i) integrating the businesses, (ii) deleveraging the company and (iii) delivering the expected synergies. This is how we intend to generate longterm shareholder value.”
Felipe Dutra, CFO, said: “During the third quarter we continued to experience CoS/Hl increase vs. last year, however, we anticipate significant deceleration in CoS/Hl growth during the 4Q08, as commodity price comparisons ease. On a full year basis we expect the CoS/Hl increase to be moderately above of the upperend of our previous expectation, which was between 56%.
"This performance is primarily driven by the combined effects of lower than expected volume growth in Zones with below average CoS/hl (LAN and CEE) and a lower dilution of industrial fixed costs embedded in the Cost of Sales due to lower than expected volumes overall.”