Grupo Modelo, S.A.B. de C.V. and Subsidiaries, the leading brewer in Mexico and producer of the best-selling Mexican beer in the world, on Friday announced its financial and operating results for the first quarter of 2011.
During the first quarter of the year, total volume sold in the domestic market, including the imported brand portfolio, totaled 8.7 million hectoliters, an 11.5% increase compared to the same period of 2010. This is the result of a recovery in consumption levels and a low comparison base, since during the first quarter of the previous year volume decreased 5.7% because of atypical behavior due to various negative factors. It is worth mentioning, however, that even as compared to the first quarter of 2009 we had a positive growth of 5.2%.
Export volume reached 3.5 million hectoliters, an increase of 14.6%, fueled by double-digit growth in practically all regions. In the US we outperformed the import segment due to the good performance of all our brands at the consumer level and because our distributors are taking measures in anticipation of the start of our highest selling season. Exports represented 29.0% of the total sales mix, compared with the 28.5% recorded in 2010.
Net sales grew 9.6% totaling 19,251 million pesos. Domestic sales increased 11.5%, driven by the solid volume growth, while the price per hectoliter remained stable compared with the same quarter of 2010. At the end of February, we implemented a price increase in Mexico based on our revenue management system, aiming to maximize opportunities according to brands, presentations and territories. Net export revenues increased 9.2% because volume more than offset the 4.7% decrease in the peso price per hectoliter, which reflects the appreciation of the peso versus the dollar. However, the price per hectoliter in dollars showed a recovery of 0.8%. Export sales for the quarter in dollars totaled 606 million, a 15.5% growth compared to the prior year.
During the quarter, Crown Imports, LLC, registered net sales of 532 million dollars and an operating profit of 119 million dollars.
The cost of goods sold grew 5.7%, below the net sales growth. The total cost per hectoliter decreased 5.9% as a result of a greater absorption of fixed costs due to higher volume sales as well as favorable prices in some of our main inputs. Gross profit totaled 10,598 million pesos, a 12.9% increase with respect to the prior year. Gross margin expanded 170 basis points and stood at 55.1%.
Operating expenses increased 11.9%, due to higher distribution and marketing expenses as well as expenses in information technology associated to different projects being developed in the organization. Operating profit totaled 4,902 million pesos, a 14.2% growth compared to 2010. The operating margin reached 25.5%, an expansion of 110 basis points.
EBITDA (Operating income + Depreciation and Amortization – Equity income of Associates included in COGS) totaled 5,867 million pesos, a figure 14.6% higher than the one registered in 2010. This figure reflects a 10.4% increase in depreciation and amortization. The EBITDA margin stood at 30.5%, representing a 140 basis points growth compared with the previous year.
The Comprehensive Financing Result showed a one million peso gain compared with the 214 million peso cost registered in the first quarter 2010. This figure is consequence of a lower exchange rate loss generated in the period.
Other expenses and profit heading registered an expenditure of 494 million pesos, due to an increase in the employees’ profit sharing provision and the fixed asset write-offs.
Taxes for the quarter totaled 1,045 million pesos and the effective tax rate was 23.7%. Net majority income was 2,158 million pesos, a figure 3.1% higher than the one registered in 2010, and the margin stood at 11.2%.
Financial Position
As of March 31, 2011, Grupo Modelo’s cash and marketable securities accounted for 21.5% of total assets, which totaled 125,720 million pesos, representing a 4.3% increase over the last twelve months. The company’s financial position remained strong without long-term interest bearing debt, and short-term operational liabilities totaling 11,081 million pesos. Majority stockholders’ equity totaled 79,341 million pesos, representing a 4.5% growth compared to the prior year.
Capital Expenditures
During the first quarter of 2011, Grupo Modelo invested 705 million pesos of internally generated resources, allocated to different areas of the organization.
Dividend Payment
On April 11, 2011, at the Annual Shareholders’ Meeting a dividend of 7,210 million pesos was declared, which corresponds to 2.23 pesos per share for each of the 3,233,360,332 outstanding shares. The dividend payout ratio was 72.5%. The dividend will be paid in full, in one single payment, on April 20, 2011.
Anheuser-Busch International Holdings, Inc. received a dividend directly form Diblo for 2,184 million pesos as a result of its 23.25% stake in this company.