Ab InBev Profit Jumps, Strong Dollar Weighs on Sales--Update

By Matthew Dalton 

BRUSSELS--Anheuser Busch InBev NV said on Wednesday that a derivatives gain pushed up its net profit sharply in the first quarter, helping offset weak U.S. demand for the group's beers and the impact of a strong dollar on revenue from the rest of its global beer empire.

AB InBev, the world's largest brewer, said net profit jumped to $2.68 billion in the three months to end-March from $1.37 billion in the same period a year ago. The brewer booked a gain of $757 million on derivatives used to hedge the price of shares it hands out as compensation to employees.

Revenue fell slightly to $10.45 billion from $10.61 billion a year ago, a decline the group attributed to the strong dollar, which lowered revenue by about $1 billion. Sales in the U.S. also were weak, as the company a year ago had built up stocks ahead of negotiations with labor unions in the U.S. where it cut jobs last year.

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Even excluding this effect, AB InBev's performance in the U.S., its largest market, continued to disappoint.

Several of its flagship brands, including Budweiser and Bud Light, continued to lose market share in the U.S. The brewer has been struggling for years to adjust to changing tastes in the U.S., where consumers increasingly prefer craft beers over AB InBev's mass-market lagers.

Felipe Dutra, AB InBev's Chief Financial Officer, said major advertising campaigns unveiled by the brewer this year have helped slow the decline in Budweiser's market share.

"We have a long way to go to stabilize the share of Budweiser, but the year is off to a good start," Mr. Dutra said.

Budweiser's sales outside the U.S. have continued to rise, fueled by strong demand in China, Brazil and even the troubled Russian market, he said.

Beer volumes sold in Brazil, AB InBev's second-largest market, rose around 1%, despite the country's shaky economy. Brazilian revenue also benefited from effort to sell higher-priced beer and other measures.

"The beer market in Brazil is very resilient," Mr. Dutra said.

Write to Matthew Dalton at [e-mail]

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