Colombia: Grupo Empresarial Bavaria (GEB) Announces First Quarter 2005 Earnings

Grupo Empresarial Bavaria, GEB, the largest beverage company in Colombia and the second-largest brewer in South America, announced on April 29 increases in sales volumes, net sales, and EBITDA for the first quarter of 2005. Principally as a result of higher non-operating expenses and a higher tax provision, net income in the first quarter of 2005 declined compared to 2004.

Sales volume grew by 6.5 %, reaching 8.6 million hectoliters (hl) sold. Net sales increased by 3.3 percent to Ps. 1.2 trillion (US$496 million), and EBITDA increased by 7.9 percent to Ps. 505,484 million (US$212 million). All comparisons are with respect to the corresponding prior-year period.

Ricardo Obregón, President of GEB, noted: “With the first quarter results, GEB continues to demonstrate its competitive strength throughout the region. After considerable efforts to improve the efficiency of our manufacturing and logistics operations, which yielded a substantial improvement in our margins, we are now focusing on executing our marketing strategy, based on the segmentation of our brand portfolio and product innovation. These are already beginning to deliver positive results.”

“GEB’s positive performance in sales volume reflects a high level of marketing activity, which included new product launches and brand renewals of already-existing products in its countries of operation.”

Beer and malt beverage sales in Colombia grew 7.2 percent during 1Q2005 when compared to 1Q2004, primarily due to the increase in sales volume of the Póker brand following the introduction of its new image in late 2004. Other brands such as Aguila, Aguila Light, and Costeñita also performed positively as a result of increased Point of Sales (POS) activity.

An 8.8 % increase in Peruvian beer and malt beverage sales resulted from the increase in sales of our Cristal and San Juan brands, as well as from the positive reception for Pilsen Callao’s new 500 ml presentation. Sales volumes in Peru also benefited from the pricesegmentation strategy in that country.

In Ecuador, beer and malt beverage sales grew 5.5 percent as a result of the successful launch of Clausen beer in November 2004. New presentations of the Pilsener, Pilsener Light and Clausen brands in aluminum cans, which were introduced in late 2004, along with increased POS activity also contributed towards sales volume growth in Ecuador. GEB’s beer market share in Ecuador was an estimated 94.2 percent, as compared to 93.0 percent in 4Q2004, notwithstanding the arrival of a new competitor in October 2004.

Sales volumes in Panama grew only 1.2 percent as a result of a generalized slowdown in consumption in that market due to the fiscal-reform initiatives during the quarter. GEB’s beer market share was an estimated 81.1 percent, as compared to 77.0 percent in 4Q2004.

Sales volumes in the Other beverages category were also strong, led by water sales in Colombia and Ecuador and fruit juice beverage sales in Panama. In Peru, sales volumes declined because of the termination of the Pepsi Co. franchise in the second quarter of 2004. Excluding Pepsi Co. products from Other beverage sales volumes in 1Q2004, total sales volumes in Peru would have increased by 6.3%.

Grupo Empresarial Bavaria (GEB) is the largest beverage company in Colombia and the second largest brewer in South America. Its Águila, Cristal, Pilsener, and Atlas brands are industry leaders in Colombia, Peru, Ecuador, and Panama, respectively. GEB also markets soft drinks, fruit beverages, mineral water, and milk. GEB’s parent company is Bavaria S.A., listed on the Colombian Stock Exchange.

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