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Mexico: Profits down – Sales Up – Exports down for Modelo


Mexican brewer Grupo Modelo reported a 47 percent decline in second-quarter net profit on Wednesday, hit by the cancellation of some derivative positions that more than offset an increase in sales.

Modelo (GMODELOC.MX: Quote, Profile, Research) earned 1.364 billion pesos ($104 million) in the April-to-June period, down from 2.575 billion pesos in the same quarter of 2008.

The drop in profit resulted from the cancellation of peso/dollar derivatives, which cost the company 2.038 billion pesos, or around $154 million, when announced in June.

The company was, however, able to increase quarterly sales domestic volume by 3.2 percent, helped by a shift in the Easter week and marketing strategies that offset the impact of a flu outbreak that shut down parts of the economy for several days in May.

Export volume fell 4.6 percent in the quarter from a year ago although it showed an improvement from the January-March period, the company said.

Net sales rose 9.8 percent to 22.409 billion pesos.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 11.6 percent to 7.296 billion pesos in the second quarter.

Regarding Modelo’s nine-month-old spat with partner Anheuser-Busch, which owns half of the Mexican brewer, Chief Executive Carlos Fernandez declined to say during a conference call with analysts when the fight could be settled.

“Basically I will skip the issue of the arbitration which I have been commenting on several occasions. That process continues and it all depends on the arbitrators,” he said.

The Mexican brewer, maker of the popular Corona beer, initiated in October an arbitration against its U.S. partner, claiming it did not consult Modelo about the takeover by Belgium’s InBev of Anheuser-Busch last year.

The transaction created AB InBev (ABI.BR: Quote, Profile, Research), the world’s largest brewer.

Modelo shares rose 0.76 percent to 46.45 pesos Wednesday noon. ($1 = 13.17 pesos as of end June) (Reporting by Cyntia Barrera Diaz; Editing by Steve Orlofsky)

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Thursday, December 14, 3:13 pm

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