Colombia: Brewer Bavaria Business Group (GEB), which dominates beer markets in Colombia, Peru, Ecuador and Panama, reported on July 29 a slip in quarterly profits due to financing costs but slightly higher operating income. Second-quarter net profit fell to 19.4 billion pesos ($7.4 million) from 38.0 billion pesos in the period to June 2003, the company said. The fall was due largely to financing costs, said the company run by Colombian magnate Julio Mario Santo Domingo. GEB earnings before tax, interest, depreciation and amortization (EBITDA) rose to 460.8 billion pesos from 436.5 billion pesos in the second quarter of 2003, according to Reuters.

Operating income rose to 1.2 trillion pesos ($454.9 million) in the second quarter from 1.17 trillion pesos from April to June 2003. "All our operations saw significant growth, especially in the beer segment in Ecuador and Panama, where we have been able to maintain our leadership in very competitive environments," said GEB president Ricardo Obregon.

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. But it said at the time it has no plans for further acquisitions this year.

Operating costs rose by 9.8 percent compared to the second quarter of 2003 to 392.5 billion pesos ($149.0 million), largely due to more spending on marketing in Colombia, where the company launched products, and in Ecuador. Sales of beer and malt drinks increased by 3.3 percent to 6.72 hectoliters. Virtually all the growth came outside Colombia.

Consumption in Peru, a market that Bavaria entered in 2002, rose 8.6 percent to 1.51 hectoliters. Sales of other beverages, including bottled water, juice, milk drinks and soft drinks, rose by 5.5 percent to 1.39 hectoliters.

In the first half, GEB saw its net profit slip slightly to 41.6 billion pesos ($15.8 million) from 44.0 billion pesos. The group's Colombian unit, Bavaria SA reported net profit rose to 43.8 billion pesos ($16.6 million) in the first half, compared to 42.6 billion pesos in the same period of 2003, the Securities Superintendency said separately. Bavaria SA's operating income rose to 1.1 trillion pesos ($417.6 million) from 988 billion pesos in the six months to June 2003, the Superintendency said. GEB said its net debt was 1.26 times greater than its net worth of $1.54 billion.

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