Mexico: Grupo Modelo, the No. 1 brewer in Mexico and maker of popular Corona beer, said on February 18 its fourth-quarter net profit rose 31.5 % amid vigorous export growth, mainly to the United States. Modelo, 50 % owned by the world's top brewer Anheuser Busch Cos. Inc., beat analysts' expectations as the bottom line came in at 1.114 billion pesos ($99 million), up from 847 million pesos in the October-December period of 2002, Reuters revealed.
A previous Reuters survey of analysts had forecast a net profit of 1.016 billion pesos for Modelo, which also brews Pacifico, Negra Modelo and Victoria beers. Modelo's shares surged on the Mexican bourse on Wednesday, closing up 4.70 % at 29.61 pesos, a 10-year high and one of the top 10 gainers. Its shares are up around 10 % this year, lagging a 15 % rise in the bourse's key index. Shares for Modelo's rival Femsa, due to report its fourth-quarter results next week, fell 0.51 percent to 48.77 pesos, Reuters said.
Exports for Modelo, which sells five beers abroad in 150 countries with 90 % going to the United States, drove operations all last year and far outstripped growth in domestic sales, which have been tough amid an insipid economy. Modelo said export volumes soared 19.7 % in the quarter while domestic sales volumes, after showing several meager months, moved up 6.3 %, with strong pre-Christmas demand in December. Modelo said the year-on-year export jump was from more beer sales in the United States and also inventory buildup by distributors because Modelo told them it would jack up prices for its Corona and Corona Light beers from January 1.
Looking ahead, analysts said volumes will dip in the first quarter because U.S. buyers built up inventories in December ahead of the price hike and domestic prices were also raised in January for some of its brands in certain parts of Mexico. "We see a fall in volumes in the first quarter because distributors in the United States overstocked (in the fourth quarter)," said Mauricio Brocado, analyst with IXE brokers
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter totaled 2.987 billion pesos, up 22 percent and also better than expected. The operational improvement came as Modelo cut costs in advertising and distribution on the domestic front, which represents 71.8 percent of sales volumes. "We continue with our efforts to make our productive areas more efficient and, above all, to reduce some spending in marketing and in distribution in Mexico," said Jose Pares, head of Modelo's investor relations. Fourth quarter revenues rose 9.7 percent to 10.386 billion
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