* Q2 core profit (EBITDA) $4.85 bln vs $4.59 bln expected
* Brazil sales volumes up 7.2 pct with World Cup boost
* Keeps outlook, expects higher distribution costs
(Updates with one-offs, shares, analyst comment)
By Philip Blenkinsop
BRUSSELS, July 31 The maker of Budweiser, Stella
Artois and Corona beers experienced a sharp surge in sales in
Brazil during the World Cup with the month-long contest leading
to consumption of an extra 140 million litres or 2 million
Anheuser-Busch InBev, the world's largest brewer,
said on Thursday this helped it to earn more than expected in
the second quarter, along with strength in China and Mexico and
an exceptional gain.
The company, which sold more than one in five beers drunk
worldwide last year, also took advantage of Brazil's hosting of
the soccer tournament to propel sales of soft drinks, which
increased by far more than did beer sales.
Pepsi, which AB InBev bottles and distributes in Latin
America, had fared well, as had the company's own caffeine-rich
Guarana Antarctica, a sponsor of the Brazil soccer team.
Brazil, the company's second-largets market, accounts for
more than two-thirds of the group's non-beer sales, themselves
about a 10th of overall volumes.
Asia-Pacific and Mexican earnings were higher than expected,
while increased marketing did cut into margin in Latin America
North, including Brazil.
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 that volumes in
China would be solid.
The United States, AB InBev's largest market, would see an
improvement due to a stronger economy, partly offset by an
exceptionally cold winter that hit brewers in the first quarter.
The world's top brewers are relying on Latin America, Asia
and Africa for growth amid subdued consumer spending in slowly
recovering Europe and limited U.S. expansion.
ONE-OFF GAIN INFLATES PROFIT
The brewer reported a 9.5 percent like-for-like rise in
second-quarter earnings before interest, tax, depreciation and
amortisation (EBITDA) to $4.85 billion. The average forecast in
a Reuters poll was $4.59 billion.
However, this year's figure was inflated by a $223 million
one-off gain linked to U.S. pension healthcare benefits along
with $172 million from its recent acquisitions of Korea's
Oriental Brewery and China's Siping Ginsber.
AB InBev shares began strongly, rising by as much as 1.7
percent, but were up just 0.3 percent at 1045 GMT at 81.97
The STOXX European food and beverage index was off
0.8 percent, with Diageo down slightly after weakness in
"It's a solid performance, but not the blow-out it appeared
to be at first sight," said KBC Securities analyst Wim Hoste,
who has an 'Accumulate' rating and 87 euro price target.
The group said higher prices and drinkers' shifts to premium
products led to greater revenue, while cost control limited the
impact of greater advertising and marketing expenses, much of it
linked to the World Cup.
The company maintained its full-year outlook, except that it
now saw distribution expenses rising by a mid- rather than a
low-single-digit percentage, because of increased costs in
Brazil, the United States and Mexico.
The increase in Brazil, it said, was due to a greater
proportion of its own distribution and more than offset by
The company also said it remained committed to realising $1
billion of cost savings from taking full control of Mexico's
number one brewer, Grupo Modelo, last year. Savings to date have
totalled $715 million.
(Editing by Jeremy Gaunt)