[BRUSSELS] Anheuser-Busch InBev, the world's top brewer set to buy number two SABMiller, reported lower than expected earnings in the first three months after one of its most challenging quarters in crisis-hit Brazil in years.
The brewer of Budweiser, Stella Artois and Corona had already cautioned in February that it was likely to have a weak start to the year in Latin America's biggest economy. Its beer volumes fell by 10 per cent.
Brazil, where AB InBev has two-thirds of the beer market, contracted at its sharpest rate since 1990 last year and the outlook for 2016 is nearly as bad with a political crisis now adding to its problems.
AB InBev's first-quarter core profit (EBITDA) rose by 2.5 per cent excluding the impact of currencies and one-offs to US$3.46 billion, compared with the average forecast in a Reuters poll of US$3.73 billion.
The brewer has succeeded in pushing through price hikes, but has been hit by the weakness of currencies, notably the Brazilian real and the Mexican peso, to the dollar, although Mexico was the star performer with 13 per cent more beer sold.
Overall, the company retained its forecast that revenue per litre would grow, with strong volume increases in Mexico, an improvement in the United States, a rise in revenue in Brazil and pressure in China.
China's manufacturing sector expanded for a second month in a row in April but only marginally, raising doubts about a recent pick-up in the world's second-largest economy.
AB InBev gave no new information on its planned US$100-billion-plus takeover of nearest rival SABMiller, saying it still expected the deal offering new markets in Africa and Latin America to close in the second half of this year.