Aug. 13 (Bloomberg) -- Cia. de Bebidas das Americas, Latin America’s biggest brewer, said second-quarter profit rose 34 percent after price increases and new packaging helped boost its share of the Brazilian beer market.

Net income climbed to 1.38 billion reais ($748 million), or 2.23 reais a share, from 1.03 billion reais, or 1.67 reais, a year earlier, Sao Paulo-based AmBev, as the unit of Anheuser- Busch InBev NV is known, said today in a statement on its Web site. Profit topped the average 1.14 billion-real estimate of seven analysts surveyed by Bloomberg. Net sales rose 13 percent to 5.35 billion reais.

AmBev, brewer of Antarctica, Bohemia and Brahma beers, said its average share of the Brazilian market climbed to 68.3 percent from 67.3 percent a year earlier. Chief Executive Officer Joao Castro Neves said new bottle sizes, such as the 1- liter beer bottle, helped boost sales in Brazil.

“The underlying trends were a lot stronger than we expected,” Juliana Rozenbaum, an Itau Corretora analyst, wrote in a report. AmBev showed “impressive strength in volumes and pricing and strong help from lower hedged commodities.”

AmBev began reporting results using International Financial Reporting Standards in the first quarter. Last year’s numbers were revised to account for the new accounting practices.

Drinks Volume

Total drinks volume rose 4 percent, with a 5.2 percent increase in Brazilian beer volume sold, AmBev said. Growth in real disposable income for a second consecutive quarter and good performance of its new products contributed to the increase in Brazil, AmBev said.

Total volume grew 1.1 percent in the Hila-ex region, which includes Peru, Ecuador, Venezuela, Guatemala and the Dominican Republic. At the Latin America South division, which includes Argentina, Uruguay, Paraguay, Bolivia and Chile, volume rose 0.2 percent. In Canada, volume rose 2.3 percent, AmBev said.

Net debt decreased to 8.76 billion reais from 10.7 billion reais at the end of 2008 as the company paid off 1.7 billion reais of promissory notes to Banco do Brasil SA in April. The company obtained a 400 million-real loan from Brazil’s state development bank, known as BNDES, in June to support investments at a new plant in the country.

Second-Half Outlook

While the second half of the year “should be better than we anticipated earlier in the year,” it will be “more challenging” than the first half, AmBev said. Higher expected investments in marketing and sales will weigh on earnings, the brewer said.

AmBev may be hurt in the third quarter by a 352.7 million- real fine imposed by the country’s antitrust agency in July, Renato Prado, an analyst at Banco Fator wrote in a report published Aug. 3. The agency, known as Cade, said AmBev limited competition by discouraging retailers from stocking other brands.

“The practices used by AmBev to sustain its market share have been threatened,” Prado wrote in the report. “They may cause an increase in the competition in the Brazilian beer market.”

AmBev said in today’s statement it plans to appeal the decision and hasn’t accounted for the amount in its interim financial statements because it believes the likelihood of loss in the Brazilian courts isn’t probable.

AmBev fell 0.01 percent to 135.90 reais in Sao Paulo trading today. The shares have risen 34 percent this year, less than the benchmark Bovespa index’s 52 percent increase.

To contact the reporter on this story: Laura Price in London at lprice3@bloomberg.net

Last Updated: August 13, 2009 16:44 EDT