Anheuser-InBev: Profits Up, Sales Flat

(AP)  The world's largest brewer and maker of Budweiser reported Thursday a fourth quarter profit of $1.28 billion, helped by cost cuts and price hikes, but said beer sales were stagnant and forecast no improvement in 2010.

Anheuser-Busch InBev SA sold 0.7 percent less beer and soft drinks in 2009 during the economic downturn and says that global beer demand is neither growing nor shrinking.

"We see no improvement in the operating environment today," the company's chief financial officer Felipe Dutra told reporters.

Other brewers Heineken and SABMiller have also reported flat or falling beer sales for some or all of last year.

AB InBev said the $1.28 billion profit for the three months ending Dec. 31 was some 17 percent lower than the third quarter but far higher than the $29 million it reported a year ago.

Revenues in the fourth quarter were $9.29 billion, down from $9.76 billion in the third quarter but up nearly 4 percent from $8.96 billion in 2008's fourth quarter. Fourth-quarter volumes climbed 1 percent from a year ago.

For all of 2009, AB InBev made a profit of $4.6 billion and had $36.76 billion in revenues.

AB InBev said in a statement that global demand for beer "remains relatively resilient" and it expected a "solid operating performance in 2010." It warned that first quarter volume sales may suffer from the cold weather in the U.S., its largest market, and alcohol tax hikes in Russia.

The brewer said it now depends on emerging economies for about half of its revenue and most of its volume sales. It is the market leader in the U.S. and in Brazil.

It said it would focus on growing its business after a tough year of cost-cutting and deleveraging. Debt paydown is still a top priority, it said, and would be funded by generating "significant free cash flow."

"We face 2010 as a much stronger and more focused company because we have the distraction of our disposal program behind us," said Dutra. "Today we can focus our energy toward growing our core business."

AB InBev has spent the last year struggling with the aftermath of a $52 billion takeover in July 2008, just weeks before the financial crisis sent debt costs soaring.

The company said it has now managed to extend some $20 billion in outstanding debt and this month obtained $17.2 billion in long-term bank financing to fully refinance the takeover debt.

It has also shaved some $1.1 billion from operating costs as it merged the two companies and has made $9.4 billion from selling off InBev's South Korean beer unit, Anheuser-Busch's theme parks and units in Britain and China. It said it has no plans to divest anything else.

The company said it last year added $787 million in working capital and reduced capital expenditure by $1.5 billion.

It has some $1.7 billion to spend on major projects this year, it said, and was "permanently assessing" opportunities to enter new markets but had no immediate plans to expand.