Colombia: Bavaria narrows 3-qtr net loss as sales rise

South America's second-biggest brewer by sales, Grupo Empresarial Bavaria, said losses narrowed in the third quarter from a year ago as a marketing drive helped lift sales, Bloomberg communicated on October 31.

Bavaria, which was bought by London-based SABMiller Plc in July, said in an e-mail statement that had a net loss of 35 billion pesos ($15 million) compared with a loss of 64.7 billion pesos a year earlier. Net sales during the quarter rose 15.6 percent to 1.33 trillion pesos from 1.15 trillion pesos a year earlier, the company said.

Bavaria's spent $192 million to upgrade capacity at its plants in Colombia, Ecuador, Peru and Panama this year and an additional $40 million on improving marketing in Colombia, where the bulk of its beer is sold, helping reduce losses and increase sales as consumers drink more beer as the nation heads to its sixth consecutive year of economic growth, said Edgar Jimenez, an analyst at Promotora Bursatil brokerage in Bogota.

“They have turned things around and with a strong push to market products,'' Jimenez said in an interview before the results were released. “Its losing streak may be coming to an end.''

Non-operating income, which includes the effect of changes in the exchange rate, fell 63 percent to 91 billion pesos as the peso gained about 14.5 percent against the dollar from the end of the third quarter last year to the end of the period in 2005. Non-operating expenses fell to 398 billion pesos from 548 billion pesos a year earlier.

Total sales by volume during the quarter were 9.4 million hectoliters, up 13 percent from a year ago. The country contributing the most growth in the quarter was Colombia followed by Peru.

“Our strong marketing initiatives during the third quarter of 2005 captured the attention of our consumers, and increased demand for our products across the board, resulting in unprecedented double-digit volume growth,'' Bavaria Chief Executive Ricardo Obregon said in the statement. “We are confident that this upward trend will continue in the coming quarter.''

Shares of Bavaria SA, the flagship of the Bavaria Group, rose 0.8 percent to 43,900 pesos. The shares have gained 61 percent this year.

SABMiller's purchase of Bavaria will help Bavaria reduce its almost $2 billion in debt -- which it took on to fund expansion in Peru, Ecuador and Central America -- and compete with InBev, the world's No. 2 beermaker. InBev was created when Interbrew SA of Belgium bought Brazil's Cia Brasileria de Bebidas last year.

Bavaria, which will be delisted from the Colombian stock exchange, expects earnings before interest, taxes, depreciation and amortization of more than $800 million this year, up from about $797 million last year, Obregon has said

Bavaria is the third-biggest company by weighting on Colombia's benchmark stock index with 10 percent. Suramericana de Inversiones SA, the nation's largest financial services company, has an 18.2 percent weighting, followed by Bancolombia SA, the nation's biggest bank, with 12.9 percent.

The consolidated results of the Bavaria Business Group include its majority-owned subsidiaries in Colombia, Peru, Ecuador and Panama.

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