Companhia de Bebidas das America (ABV), the Brazilian beer giant reported, robust fourth-quarter 2010 earnings of R$0.85 per share, up 46.6% from prior-year quarters’ earnings of R$0.58. The growth was primarily attributable to increased volume, price increases and stronger profit margins.

For full fiscal 2010, the company’s earnings grew 36.5% to R$2.49 per share compared with the prior fiscal year’s R$1.88 per share.

Financial Details

Net sale for the quarter grew 10% to R$7,455.3 million (US$4,406.8 million) compared with R$6,778.6 million (US$3,909.9 million) in the prior-year quarter. The increase was primarily driven by a 13.2% year-over-year growth in Brazil to R$5,275.0 million (US$3118.1 million). Overall volumes inched up 2.7% year over year to 48.0 million hectoliters primarily due to a 3.6% growth in Brazil, which recorded an increase of 3.4% and 4.0% in beer and CSD & NANC volumes, respectively.

During the quarter, AmBev’s EBITDA recorded a growth of 24.4% year over year to R$3,755.1 million (US$2,219.64 million), while EBITDA margin expanded 5.8% to 50.4%. The growth was mainly the result of higher prices and lower logistic costs in Brazil, better market performance and market share gain in Latin America South, effective cost management in Canada and higher volumes in HILA-Ex.

Selling, marketing and administrative expenses decreased 4.9% year over year to R$1,931.1 million (US$1,141.5 million) due to lower logistics costs and effective cost management.

AmBev ended the quarter with cash and cash equivalents of R$5,908.3 million (US$3,492.4 million) and long-term debt of R$4,164.2 million (US$2,461.5illion) compared with a cash balance of R$4,024.3 million (US$2,321.2 million) and total debt of R$6,460.2 million (US$3,726.2 million) in the year-ago period.

AmBev plans to invest R$2.5 billion in Brazil in fiscal 2011 and will look for opportunities to enhance its working capital and capex plans.

AmBev, which competes with Fomento Econ (FMX) and Molson Coors Brewing Company (TAP), currently holds a Zacks #3 Rank, implying a short-term ‘Hold’ rating on the stock. Besides, the company retains a long-term ‘Neutral’ recommendation on the stock.

 
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