InBev, the world's second-largest beer producer reported a 16.5% like-for-like rise in 2007 core profit.Although the result beat expectations, the firm said it faced greater challenges in 2008.
The brewer, whose key brands include Stella Artois, Beck's and Brahma, said EBITDA (earnings before interest, tax, depreciation and amortization) came in at €4.99 billion ($7.5 billion), against the average €4.90 billion forecast from 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 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 Q1.
“In summary we recognize that in 2008 there will be greater challenges to overcome than there have been over the past three years,” InBev said in a statement.
World number four 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 hectoliter should move in line with the 4% average inflation in the countries to which it was exposed after moving below inflation in 2007.
Its rivals have mentioned input cost inflation between 8.5% and 15% this year and said price rises of around 2% to 5% may be necessary.
InBev said it was adapting its dividend policy by removing the current maximum 33% payout ratio.
Shares in the company have come down 20% since it reported Q3 figures, though they are only 7% off in the year to date. The DJ Stoxx food and beverage index has dropped 9% this year. (Reuters)