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Mexico’s Grupo Modelo sees recovery in beer sales

* Q1 net 2.16 bln pesos vs year ago 2.09 bln pesos
* Revenue up 9.6 pct (Adds CFO comments, share movement, details on prices)

Mexican brewer Grupo Modelo (GMODELOC.MX) posted a slight rise in first-quarter profit on Friday as higher costs offset a big pick-up in beer sales.

Domestic sales and exports increased by double digits from the year earlier, the company said, noting consumer spending on beer appears to be recovering after the worldwide recession.

"It gives us confidence that the start of the year looks quite promising," said chief financial officer Emilio Fullaondo on a call with analysts.

Even comparing the first-quarter 2011 sales with 2009, which was a better year for Modelo than 2010, the volume was up more than 5 percent, Fullaondo said.

Still, sales costs in the first quarter of this year also rose and Modelo said it spent more on distribution and marketing in the quarter.

To offset rising costs, the brewer said it started to raise prices in Mexico at the end of February.

The company does not have any hedges in place to manage price changes, but executives told analysts they are monitoring prices, particularly for malt and aluminium.

Grupo Modelo shares were down 1.43 percent in morning trading in Mexico at 74.50 pesos.

The company earned 2.16 billion pesos ($181 million) in the first quarter, up 3 percent from 2.09 billion pesos in the same period a year earlier.

Modelo, half-owned by the world's biggest brewer Anheuser-Busch InBev SA (ABI.BR), said quarterly revenue rose 9.6 percent to 19.25 billion pesos.

Exports accounted for 29 percent of Grupo Modelo's total sales in the first quarter of this year, up slightly from 28.5 percent last year, the company said. ($1 = 11.8903 pesos as of end-March)

15 Apr. 2011

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