InBev sticks to Bud deal as results beat forecasts

Source: Reuters

Date :11/6/2008 9:21:28 AM

World number-two brewer InBev insisted on Thursday its $52 billion takeover of Anheuser-Busch was on track after third-quarter results slightly exceeded expectations despite rocketing costs.

By Philip Blenkinsop

Belgium's InBev, the brewer of Stella Artois and Beck's, said it was on course to close the purchase by the end of the year in the face of market turmoil that forced the postponement of a $9.8 billion rights issue last month.

Chief Financial Officer Felipe Dutra told a conference call the deal to buy the maker of Budweiser, agreed in July before the financial crisis deepened, was simply awaiting approval by Anheuser shareholders on November 12 and by regulators.

"I'm not anticipating and I do not believe in a change in terms of capital structure and I firmly believe the deal will be closed based on the agreed-upon conditions," he said.

"The rights issue will be executed as part of the capital structure of the transaction," he said, adding the delay was the result of volatility rather than price or demand.

Beer sector consolidation hotted up further on Thursday as Molson Coors Brewing Co emerged as the holder of a 5 percent stake in Australia's Foster's Group .

InBev said EBITDA (earnings before interest, tax, depreciation and amortization) rose 6.5 percent on a like-for-like basis to 1.39 billion euros ($1.79 billion) in the July-September period, from 1.33 billion a year earlier.

A Reuters poll of eight analysts had produced a consensus of 1.37 billion.

The core profit margin edged up to 35.3 percent from 35.2 percent a year earlier, but fell by 40 basis points on a like-for-like basis. InBev had earlier forecast a contraction.

InBev shares rose as much as 6.1 percent in early trading, making them the strongest in the FTSE Eurotop 300 , although eased back to a gain of 1.63 percent to 29.60 euros at 7:23 a.m. EST.

This followed Wednesday's 13.5 percent fall after Danish rival Carlsberg trimmed its full-year earnings outlook due to weaker consumer sentiment. Some analysts saw Thursday's initial gain as a relief rally.

"The numbers are broadly in line. The shares were really badly hit yesterday," said Wim Hoste, analyst at KBC Securities.

LOWER GROWTH, INFLATION IN 2009

InBev, set to take back the spot as number-one brewer from SABMiller Plc when it buys Anheuser, said cost of sales per hectoliter accelerated to 9.9 percent in the third quarter, but should decelerate significantly in the final quarter.

For the full year, the figure should be "moderately" above the upper end of its previous expectation of 5 to 6 percent.

"In 2009 cost of sales could favor us, partly offsetting lower volume growth," CFO Dutra said, adding he saw volume expansion similar to the 2008 level of 2 to 3 percent, down on 2007's increase of 5.2 percent.

Revenue increased by a like-for-like 7.7 percent to 3.95 billion euros, against analyst expectations of 3.92 billion euros, and normalized net profit rose 3.8 percent to 542 million euros. Analysts had on average forecast 537 million euros.

InBev had in October forecast high single-digit sales growth. Eastern Europe was the clear underperformer, with declining volumes and increased marketing expenses in Russia.

Anheuser, which also reports third-quarter figures on Thursday, last month said that U.S. quarterly beer volumes rose by 2.3 percent and sales from wholesalers to retailers by 3.6 percent, in what one analyst said were the strongest sales results since 2000.

The company forecast third-quarter income would rise at a low double-digit rate, helped by price increases and the launch of Bud Light Lime.

(Reporting by Philip Blenkinsop; editing by Elaine Hardcastle and John Stonestreet)

BRUSSELS (Reuters)