Brazilian brewer Ambev reported an 11% drop in third-quarter net profit on Thursday, hurt by higher tax provisions in its home market, pushing its shares down as much as 3% though the decline was in line with market forecasts.
The company said its expenditure including income tax and social contributions in the quarter totalled 1.1 billion reais (€175 million), "more than offsetting growth in adjusted (core earnings) and an improved net financial result.".
The subsidiary of Anheuser-Busch InBev, the world's largest brewer by volume, made profits of 3.57 billion reais (€567 million). Volumes slipped 0.6%.
Non-Alcoholic Drinks
"We remain focused on executing our commercial strategy and are confident in our preparedness for the summer season in South America," the company said in a securities filing.
Ambev's volumes in Brazil rose 1.3%, driven by a 3.4% boost in non-alcoholic drinks like Gatorade and Red Bull. Premium and super-premium beer brands including Corona, Spaten and Original saw a slight increase of 0.6%.
Itau BBA analysts called the results "slightly negative."
They said in a note that, while overall figures came roughly in line with their estimates, "the soft top-line dynamics in (beer sales in Brazil), driven by both volumes and prices, could set the tone for the investment thesis in the short term."
Consumer Demand
In South America, a 7.7% dip in volumes was influenced by inflation in Argentina, which negatively impacted consumer demand. However, positive performances in Bolivia and Chile provided some offset.
Core earnings, or earnings before interest, tax, depreciation and amortisation, (EBITDA), grew by 7% to 7.06 billion reais, just above the consensus forecast of 7.03 billion reais.
The brewer announced in August that Carlos Eduardo Lisboa would take over as chief executive next year, replacing Jean Jereissati Neto, who is moving to lead the company's Middle Americas unit.
