Ambev sees unit costs up this year on currency, higher taxes

Wed Feb 27, 2013 7:33am EST

* Revenue, costs to rise around 'high single-digit' levels

* Sees capital expenditure at around 3 bln reais this year

* Plans to ramp up production of Budweiser brand in Brazil

SAO PAULO, Feb 27 (Reuters) - Cia de Bebidas das Americas SA, Latin America's largest brewer, said on Wednesday that costs could rise faster than revenue this year because of more expensive raw materials, a weaker currency and rising taxes.

The company, also know as Ambev, said in its quarterly earnings report that net revenue per hectoliter is expected to grow in the high single digits in percentage terms on price increases last year and a focus on direct distribution of premium beer brands.

Ambev will ramp up output capacity in Brazil to boost sales of Budweiser beer ahead of the soccer World Cup next year.

Still, the cost of goods sold per hectoliter could grow in the high single digits to low double digits due to a rise in taxes on alcoholic beverages, a weakening currency and an across-the-board rise in the cost of raw materials, it said.

Fourth-quarter profit surged 22.7 percent from a year earlier as higher sales volumes and beer prices helped offset rising costs. Net income totaled 3.72 billion reais ($1.88 billion), beating the analysts' average estimate of 3.6 billion, according to a Thomson Reuters poll.

"The Brazilian operating result underscored almost flawless execution of an unprecedented steep tax-related beer price increase, as market share loss was minimized and margin expansion was maximized," Citigroup Global Markets analyst Alex Robarts wrote in a client note.

Ambev is part of Anheuser-Busch InBev SA, the world's biggest brewer. The parent company forecast a weak start to the year in its two largest markets, the United States and Brazil, where a wet Southern Hemisphere summer and an early Carnival period could be translated into slower sales growth.

Capital expenditures are likely to reach 3 billion reais in 2013, roughly the same level of last year, it said.

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