Brazil: InBev demonstrates the logic behind the AmBev merger

InBev stated that the 'geographical footprint' of the group's operations demonstrates the logic of its decision to merge with Brazilian unit Companhia de Bebidas das Americas (AmBev), AFX reported on March 30.

In an annual report for the full year, the brewer said: 'Our geographical footprint emphatically demonstrates the logic of the AmBev-Interbrew combination, and generates a good balance between developing and developed markets.' It added that its current presence allows the group to prepare for challenging trading conditions.

'Not every market always performs at peak levels and the best way to hedge against a downturn in any given market is to maintain a strong presence in many markets,' it said.By region, InBev said it will continue to pursue costs savings in North America 'aggressively'.

For Western Europe, the group said the UK is a challenging market due to 'stiff pricing competition' and 'the fact that many retailers are consolidating'.In late February, InBev posted a forecast-beating rise in full year EBITDA on the back of sales growth driven by its Latin American operations.

Full year EBITDA for the Leuven-based brewer came in at 3.339 bln eur, up from 1.643 bln in 2004. Sales were 11.656 bln eur, up from 7.363 bln.For guidance, InBev said it seeks 'meaningful profit margin expansion' across all regions in 2006. It reiterated its long-term goal of a 30 pct EBITDA margin by 2007. The group's EBITDA margin for 2005 was 28.6 pct.