Interbrew says Euro beer sales still weak

Modern Brewery Age, Sept 15, 2003

Associated Press--Despite the boost to beer sales from Europe's heat wave, Interbrew NV, maker of Stella Artois and Beck's, posted a weaker-than-expected 3.6 percent rise in first-half net profit Tuesday and issued a cautious outlook for the full year.

The world's third-largest brewer blamed the strong euro for holding back net profit, which rose to euro171 million (US$190 million) from euro165 million (US$184 million) a year ago--far below the average euro196.8 million (US$220.4 million) expected by analysts.

"Currency effects have been significant, but do not detract from the underlying strength of our business," said chief executive John Brock, an American who joined Interbrew early this year from British-based Cadbury-Schweppes. "I feel very bullish about the second half," he said.

While anticipating "strong continued growth," full-year earnings per share will still be "slightly lower" than last year's.

When he took the reins in February, Brock vowed to end his predecessor's costly thirst for acquisitions and to focus on integrating existing brands. But late last week the company announced a euro131 million (US$145.4 million) purchase of a 50 percent stake in the Malaysian Lion Group to become its partner in China.

In a conference call with analysts and investors, Brock defended the purchase, saying Interbrew didn't overpay. He also said relations were improving with Interbrew's Mexican partner, Fomento Economico Mexicano SA (Femsa), after a recent legal row. Interbrew lost a court battle with Femsa which prevented the Belgian brewer from reaping the rewards of its purchase of Beck's.

But Brock said selling Beck's separately "isn't a huge financial issue" and would allow for "more focus" on the Beck's brand.