Grupo Modelo Profit Rises 32% on Local Beer Sales

Grupo Modelo SAB (GMODELOC), Mexico’s largest brewer, said third-quarter profit rose 32 percent as increasing local beer shipments offset a decline in export volumes.

Net income jumped to 2.95 billion pesos ($222 million) from 2.22 billion pesos a year ago, Mexico City-based Modelo said today in a statement. Sales advanced 11 percent to 22.1 billion pesos, topping the 21.1 billion-peso average estimate of seven analysts surveyed by Bloomberg.

Modelo increased shipments in Mexico even as the economy contracted 9.2 percent in the first half. Demand was boosted by an increase in the size of Modelo’s beer bottles this year to 355 milliliters (12 ounces) from 325 milliliters, and to 1.2 liters from 1 liter.

Profits rose “on the back of positive domestic volumes, more than offsetting weakness in export,” David Belaunde, a New York-based analyst with Barclays Plc, wrote in an Oct. 22 report. “Modelo continues to over-deliver.”

Domestic sales rose 13 percent to 10.6 billion pesos as shipments in Mexico advanced 7 percent from a year ago, the company said. Export shipments fell 4.4 percent. Higher prices helped Modelo increase export sales by 8 percent to 9.86 billion pesos.

Modelo rose 10 centavos to 60.03 pesos today in Mexico City trading. The shares have jumped 37 percent this year.

Earnings before interest, taxes, depreciation and amortization -- a measure of cash flow known as Ebitda -- rose 19 percent to 6.9 billion pesos. Analysts predicted Ebitda of 5.82 billion pesos on average, according to a Bloomberg survey.

Modelo is half owned by Anheuser-Busch InBev NV (ABI), which acquired the stake after Leuven, Belgium-based InBev NV purchased Anheuser-Busch Cos. for $52 billion last year.

Modelo had filed a notice of arbitration to block Anheuser- Busch from selling its stake. Carlos Fernandez, Modelo’s chief executive officer, said last year his company is interested in buying back the non-controlling stake, which was sold to Anheuser-Busch during the 1990s.

To contact the reporter on this story: Thomas Black in Monterrey, Mexico, at tblack@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.

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