Grupo Modelo, for the time being consolidated in the associates line of ABI reflecting the 50.3% current shareholding (with lack of control) and soon to be fully taken over, reported 2Q12 results yesterday.
2Q12 volumes declined by 0.3% to 15.7m hl. Domestic volumes declined by 3.4% to 10.5m blamed by company on tough comparables (2Q11 volumewas up by +8%), unfavourable weather and an early Easter but might also reflect the regaining of Heineken of some of the share it lost early last year with its rebranding exercises. Export volume was up +6.6% to 5.2m hl and again very solid.
A continuation of strong pricing (+7.2% in domestic and flat in dollar terms in export markets with a nevertheless 15.5% positive FX effect for the export business) has resulted in an overall 12.2% increase in sales to MXN 28.1bn pesos.
2Q12 EBITDA was up 14.1% to MXN 8.45bn and net profit was up 26% to MXN 3.64bn.
We did forecast the associates line which mainly reflects the Grupo Modelo stake to increase by 5% to $ 160m which now seems, given the 26% increase in Grupo Modelo’s net profit increase but 15% MXN depreciation, a few millions light. Note that compared to our overall $ 3,783m 2Q12 EBITDA forecast this potential difference in the associates line is very small.
We stick to our Hold rating on AB InBev.