InBev NV, the world's largest brewer, said third-quarter profit rose 8.4 percent, missing analysts' estimates.

Net income increased to 519 million euros, or 85 cents a share, from 479 million euros, or 79 cents, a year earlier, the Leuven, Belgium based company said yesterday. That was below the 603 million-euro median estimate of seven analysts surveyed by Bloomberg News.

Sales in Western Europe dropped 8.3 percent in the quarter, led by lower beer volumes in the United Kingdom and "weaker" markets in Germany and Belgium, the company said yesterday. InBev gets more than half its earnings from Latin America and is the second-largest brewer in Russia, markets where demand is growing faster than in western Europe and North America.

"Overall, our third-quarter performance was below our expectations," said Chief Executive Officer Carlos Brito in the statement. "Cost management programs were key to offset the weaker top line results, mainly in the UK and China, and the commodity price pressure."

The company said yesterday that higher prices for barley and malt will increase costs for all its units. InBev expects to offset some of the expenses with cost savings.

InBev shares fell 3 cents, or 0.5 percent, to 66.35 euros yesterday in Brussels. They have climbed 33 percent this year, heading for their fourth straight annual gain.

Third-quarter sales rose 6.7 percent to 3.78 billion euros, below the median analyst estimate of 3.81 billion euros. The margin on earnings before interest, taxes, depreciation, amortization and one-time items widened by 1.1 percentage points to 35.2 percent from 34.1 percent a year earlier.

Increased earnings

Earnings before interest, taxes, depreciation, amortization and one-time items rose 10 percent to 1.33 billion euros, according to the brewer, whose roots can be traced back to Den Horen in Leuven, which began making beer in 1366. This was also below the median analyst estimate of 1.37 billion euros.

InBev, which has operations in more than 30 countries and sales in more than 130, said third-quarter sales in Central and Eastern Europe increased 19 percent, while revenue from Latin America climbed 16 percent.

"InBev is an exceptionally well-run operation, which has high exposure to faster-growth emerging markets," said Trevor Stirling, an analyst at Sanford C. Bernstein in London.

The company's AmBev unit controls two-thirds of the beer market in Brazil, where it faces increased competition from Fomento Economico Mexicano SAB.

Bloomberg News

(China Daily 11/09/2007 page16)