* Q1 core profit $3.88 bln vs Reuters poll $3.98 bln
* Revenue up 8.9 pct, marketing spending up 17 pct
* Still sees 2014 growth of Mexico, Brazil markets
* Shares fall at opening, flat by mid-morning
(Adds shares, analyst comment)
By Philip Blenkinsop
BRUSSELS, May 7 Anheuser-Busch InBev,
the world's largest beer maker, reported lower than expected
first-quarter profit on Wednesday as its spending on marketing
shot up ahead of the soccer World Cup in Brazil.
The maker of Budweiser, Stella Artois and Corona sold more
beer than a year ago in every region except Europe. Brazil and
China were the stand-out performers, with volume increases of 11
and 9.4 percent respectively.
Sales and marketing spending, much of it related to the
upcoming World Cup, jumped 17 percent.
The brewer retained a forecast that the Brazilian and
Mexican markets would return to growth this year due to the
soccer tournament and stronger economies, and this despite a
recently announced increase of excise duty in Brazil.
However, it cautioned about higher input and marketing
costs, the latter set to increase by a low to mid teens
percentage, albeit weighted more towards the first half.
AB InBev shares, which have dropped from all-time highs
since the Brazil tax increase was announced last week
, opened down 1.5 percent.
At 0924 GMT, they were trading just 0.4 percent lower, while
the STOXX European food and beverage index was little
Analysts said marketing costs were higher than expected and
savings made from taking full control of Mexico's Grupo Modelo
last year were not as high as ambitious market forecasts. AB
InBev is targeting $1 billion of synergy gains there.
"I had expected most of the (marketing) costs to be in the
second quarter, but in certain countries they already started to
do a lot of promotion ahead of the World Cup," said Bernstein
Research's Trevor Stirling.
He said the marketing spend and Mexico gains were more
issues of timing that might result in some reduction of
short-term estimates, but should not affect the longer-term
Stirling has a "market perform" rating on AB InBev shares,
which he said were trading at a 20 percent valuation premium to
its drinks industry peers.
BRAZIL: FROM HOT SUMMER TO WORLD CUP
The company, which sold more than one in five beers drunk
worldwide last year, reported an 11 percent like-for-like rise
in first-quarter earnings before interest, tax, depreciation and
amortisation (EBITDA) to $3.88 billion.
The average analyst forecast in a Reuters poll was $3.98
billion. Revenue grew by a greater than expected 8.9 percent.
Overall volumes rose a surprisingly strong 4.4 percent,
helped by increased shipments to U.S. wholesalers, part of
contingency planning ahead of labour negotiations, which
concluded last week.
The company said such shipments would decline in the second
quarter as the wholesale sector cut inventories, which grew
because sales to retailers had fallen.
AB InBev profited in Brazil, where it has a two-thirds share
of the market, from a later Carnival break, extending the summer
drinking season, warm weather and lower inflation.
The company expects the World Cup, starting in June, will
add 1 to 2 percentage points to Brazilian beer sales this year.
In its largest market, the United States, an exceptionally
cold winter meant fewer people went out to bars and restaurants.
AB InBev's sales to retailers declined by 2.6 percent, slightly
more than the industry average.
The world's top brewers are relying on Latin America, Asia
and Africa for growth amid subdued consumer spending in
recovering Europe and limited U.S. expansion.
World number four Carlsberg, the largest player
in Russia, cut its 2014 forecasts for profit and Russian beer
sales on Wednesday after a weak first quarter, hit by a lower
rouble and declining sales in eastern Europe.
(Reporting by Philip Blenkinsop; editing by Robert-Jan Bartunek
and Tom Pfeiffer)