Colombia-based Bavaria Business Group forecast on May 6 a 4 % increase in its 2004 earnings, and more than 60 % fall in the drink maker's refinancing needs against the previous year. The group, or Grupo Empresarial Bavaria (GEB), includes Bavaria, South America's second-largest brewer, along with non-brewing and foreign operations.

Mauricio Restrepo, chief financial officer, said in a conference call with analysts that earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to be $690 million in 2004. That compares with EBITDA of $661 million last year, as reported in the GEB's annual report. He estimated refinancing needs of $250 million in 2004, compared with $670 million in 2003. About $150 million of that total had already been raised in a loan from the Andean Development Corp., or CAF, announced in December.

"That refinancing risk has essentially disappeared and we will use our internally generated cash for dividends and cap-ex (capital expenditures)," he said. Restrepo said total capital expenditures for the year were seen at about $150 million.

Bavaria's stock has risen 58 percent this year to 20,520 pesos per share on May 5, due to increasing optimism about the company and a general rise of the Bogota bourse. Bavaria started 2004 at 12,980 pesos per share.

The drinks maker has been aggressively extending its reach in Latin America, and has spent $1.1 billion on expansion by buying brewers in Peru, Ecuador and Panama to double its output over the past three years. It said in March that it aimed to become the world's seventh-largest brewer within three years as Latin American populations grow and beer consumption increases.

Restrepo said in the call that GEB had "absolutely no plans to do any further acquisitions" in 2004. "Our objective for this year and the next is really to consolidate the Panamanian and the Peruvian operations that we acquired in 2001 and 2002," he said. Restrepo said he did not expect any changes in its dominant market positions in Colombia, Peru, Ecuador and Panama. Bavaria says it is already the world's 10th largest brewer.

GEB said it had 81 % of the Panamanian market, up 9 percentage points in the past year-and-a-half. In Colombia, he said Bavaria had a 99 % market share. In Ecuador he said the company enjoyed a 97 % market share. In Peru, the company said it had a 99.8 % market share.

Competition, however, could increase in Ecuador and Peru with the entry of the region's top brewer, Brazil's AmBev, which plans to merge with Belgium's Interbrew to create the world's largest brewer, in terms of volume.

Ambev bought Ecuador's No. 2 beer maker, SurAmericana, for $36 million in December. It struck an agreement in October to buy two Peruvian soft drink plants and improve distribution in that country. Restrepo said Ambev seemed to be behind schedule with building its brewing plant in Peru, according to local press reports he had read.

"It's possible that the launch of products in Peru might be somewhat delayed from the initial estimates of having that occur in the fourth quarter of this year," he said. "So, taking that into account, what we are foreseeing is to keep our 99.8 percent share of the market that we have in Peru."

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