Colombia: SABMiller’s Bavaria S.A. reports growth in revenues of 14.7%

Bavaria SA, as a separate legal entity, reported unconsolidated results from January to September 2006. Bavaria’s sales totalled 14.429 million hl (13.293 million hl; in the gaps figures year-on-year) of which 10.746 million hl (10.024 million hl) were beer sales. Net revenue reached US$2.149.428 million (14.7%).

On a consolidated basis, Bavaria sales reached 17.4 million hectolitres in the first nine months of 2006, representing an increase of 8.7% over prior year. This gratifying rate of growth was underpinned by a robust Colombian economy, increased brand and trade investments and the launches of new products and packaging innovations.

For Bavaria, as a separate legal entity, net revenues increased by 14.7%. In addition, there was a marked improvement in procurement and cost performance. However, operating expenses increased as a result of accelerated depreciation of returnable containers in the first nine months of the year, following their reclassification from inventory to fixed assets, as well as a write down due to their poor condition.

Non operating revenues were boosted in these three quarters by exchange gains on US$ investments following the devaluation of the COP against the US$. This situation was partially reversed in the third quarter following the strengthening of the COP against the US$. Net exchange gains were partially offset by the cost of refinancing debt, which will benefit the company going forward through reduced finance costs and less restrictive covenants.

Although income tax decreased in the third quarter, for the nine months income tax was up against prior year due to the improved profitability, coupled with the taxable foreign exchange gains on the devaluation of the COP.

A strong trading performance was recorded in the third quarter of the year, where Bavaria reported growth of 10% in aggregate volumes. Operating income increased by 41.9% over prior year to COP177.396 million.

Bavaria S.A. is Colombia’s leading beverage company. Its brands Aguila, Aguila Light, Poker,
Costena, Pilsen, Club Colombia, Brava, Costenita, Pony Malta, Agua Brisa, Tutti Frutti, Malta
Leona, Cola y Pola, are leaders in Colombia.

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