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. Last Updated: 07/27/2016

Interbrew Hit by Can Trend in Russia

BRUSSELS, Belgium -- Interbrew, the world's third-biggest brewer by volume, said Monday it was on track for higher annual profit, despite a setback in Russia.

Known for its Stella Artois and Beck's flagship brands, Interbrew held its forecast for an increase in annual profit to 1.50 euros per share. It reported a drop in revenues and profits for the first nine months following the sale of its Carling brewing business in Britain.

Interbrew said it had been slower than rivals to react to the shift toward using cans and plastic bottles in Russia.

"In Russia, market growth slowed significantly in the month of September, and Sun Interbrew's operations were disappointing," it said in a brief trading update statement.

"As a result of its late entry into rapidly growing PET [plastic] and can packaging, the company is now focused on building distribution in these two packaging segments, where it is expected to take some time for Sun Interbrew to reach its fair market share," the company said of its Russian unit.

News of its troubles in Russia sent Interbrew's stock down 2.09 percent at 23.84 euros ($23.23) on Euronext Brussels, leading its sector lower. Although the share price has recovered from a low of 22 euros on Oct. 9, it is still down 22.4 percent on the year, underperforming the food and beverage sector.

"This [Russia] is negative news for us as Sun Interbrew is supposed to become a major growth driver for Interbrew," Puilaetco analyst Florence Van Tomme said in a research note.

Interbrew also said growth in South Korea's beer industry slowed to 3.5 percent so far this year with volumes decreasing to levels below those of 2001.

KBC Securities analyst Marc Leemans said investors were focusing on those two pieces of news.

Although those markets were far smaller than Western Europe and North America, they promised growth for the future, he said.

In reporting its brief trading update for the first nine months of the year, Interbrew said earnings before interest, tax, depreciation and amortization totalled 1.1 billion euros ($1.07 billion), down 8.5 percent from the same period last year. Earnings before interest and tax reached 581 million euros, down 15.1 percent.

Net revenues fell 3 percent to 5.3 billion euros, while volume slipped 2.5 percent to 66.6 million hectoliters.