AB InBev Profit Growth Tops Expectations

Anheuser-Busch InBev NV (ABI), the world’s biggest brewer, rose the most in more than three years after second-quarter profit growth topped estimates as it improved sales in Brazil and sold higher-priced beers in the U.S.

So-called organic normalized earnings before interest, taxation, amortization and depreciation rose 5.8 percent, the Leuven, Belgium-based brewer of Budweiser said today. That compares with the median estimate of 10 analysts for a 3.7 percent increase. The measure excludes one-time items and the effects of acquisitions and currency fluctuations. AB InBev’s normalized Ebitda totalled $3.9 billion.

Profitability improved in North America as drinkers splashed out on more high-end beers such as Stella Artois and Goose Island and as the company extended production of its Bud Light Lime Lime-a-Rita in three breweries to help limit distribution expenses. Beer volume in Brazil, the company’s second-biggest market, dropped 0.4 percent, improving from the first quarter’s 8.2 percent plunge.

Shares of AB InBev, which this year shelled out $20.1 billion to buy the rest of Mexican brewer Grupo Modelo SAB, advanced as much as 7.9 percent, the biggest intraday gain since May 10, 2010. The stock traded up 7.8 percent at 72.95 euros in Brussels at 12:22 p.m., giving the company a market value of 117 billion euros ($155 billion.)

AB InBev sales advanced 3.9 percent on an organic basis, boosted by sales of higher-priced drinks. Analysts had anticipated growth of 3.7 percent. The company estimated it lost 40 basis points of market share in the U.S. as shoppers shifted away from its lower-priced beers. AB InBev has been aiming to sell more expensive beer to support its target of increasing revenue per hectoliter ahead of inflation and to offset a projected “mid single-digit” increase in the cost of sales.

The volume of AB InBev’s own beer sold declined less than anticipated as sales in the U.S. and Brazil fell at a slower pace than analysts had expected, with North American organic volume sliding 1.9 percent, and volume in the region AB InBev calls Latin America North 0.5 percent lower. The company repeated its outlook that industry volume in Brazil will be unchanged or drop by a percentage in the low single digits this year amid political unrest in the nation. AB InBev raised its guidance for net capital expenditure for this year to about $3.9 billion from a previous target of about $3.7 billion, due to the addition of Mexico in the estimate.

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2016 Rio Olympics: New golf course will be ready about a year before the event

News about the 2016 Rio Olympics: Construction on the golf course to be used by the 2016 Olympics in Rio de Janeiro is on pace for a test event about a year before the Summer Games, architect Gil Hanse said recently.

Hanse said the original plans were to have the course ready by 2014, giving organizers a two-year cushion before the start of the Olympics. Legal fights over the property delayed the start of work, but Hanse said construction is expected to be done by the first half of 2014 and the course will be tournament-ready in the second half of ‘1.

Hanse attended media day for next month’s U.S. Amateur at The Country Club, which he helped renovate in preparation for the tournament. Tee boxes have been added, fairways tweaked and trees cleared for the event, which will be the 16th USGA championship at the course that was home to Francis Ouimet’s ground-breaking U.S. Open victory in 1913.

Mike Trostel, the curator of the USGA museum, was also in Brookline on Thursday, using white gloves to handle the wood-shafted mashie niblick and putter Ouimet used when he beat Britain’s best a century ago. The victory by the former caddie helped establish golf in the United States.

The Amateur, which runs from Aug. 12-18, starts with 312 golfers playing two rounds of stroke play to winnow the field to 64, followed by six rounds of match play to determine the winner of the Havemeyer Trophy.

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Pope Francis celebrates 1st public Mass in Brazil

Pope Francis made an emotional plea Wednesday for Roman Catholics to shun materialism in the first public Mass of his initial international trip as pontiff, then echoed that theme when he met with drug addicts at a hospital in Rio de Janeiro.

The session with addicts was meant to drive home the message that the humble pope has repeatedly delivered during his short papacy: that the church must focus on the poor, those who are suffering and the outcasts of society.

During his speech outside the hospital, Francis stuck with the theme of faith and sacrifice that he spoke about earlier in the day during his homily in Aparecida, a small town halfway between Rio and Sao Paulo that is home to one of the most important shrines in Latin America. The pontiff urged Catholics to resist the “ephemeral idols” of money, power and pleasure.

Thousands packed into the huge Basilica of the Shrine of Our Lady of Aparecida in an agricultural region of verdant fields. Tens of thousands more braved a cold rain outside to catch a glimpse of the first pope from the Americas returning to a shrine of great meaning to the continent and to Francis.

Before the Mass, Francis stood in silent prayer in front of the 15-inch statue of the Virgin of Aparecida, the “Black Mary,” his eyes tearing up as he breathed heavily. He later carried a replica of it in his arms. Francis has entrusted his papacy to the Virgin Mary and, like many Catholics in Latin America, places great importance in devotion to Mary.

After his Mass, the pope blessed the tens of thousands gathered outside the basilica and announced that he would return to Aparecida in 2017, the year that marks the 300th anniversary of a fisherman finding the Black Mary statue in a nearby river.

Back in Rio, Francis arrived at the simple white and yellow Saint Francis of Assisi hospital in a closed car under a cold rain, and bounded out not bothering to wait for an umbrella. He entered a small chapel where a group of young Franciscan friars waited excitedly, then headed back out into the rain to greet a group of people in wheelchairs.

The pope smiled widely and spoke in an animated manner with each person in the group, while a crowd held back by metal barriers nearby snapped photos and reached out to touch the pontiff, who returned the reach and grabbed hands and arms.

Before the pope spoke, former drug addicts stood up and told their stories as the pontiff looked on seated just meters away. After the first former addict spoke, his voice full of nerves and emotion, Francis stood, crossed the gap between them and embraced the man, patting him on the back of his head with his right hand, and accepted a hand-made card from the man.

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Presidential Rush in Brazil: Lula can still come back?

Presidential rush has started in Brazil and one name is poping again.  The return to power of Luiz Inacio Lula da Silva, the mentor and predecessor of Brazil President Dilma Rousseff, is gaining traction among her supporters as her party faces a 2014 election having delivered the slowest average growth in 24 years.

Rousseff’s poll approval ratings have plummeted to the lowest of her term, and since mid-June she was showered with boos at a sold-out soccer game and by dozens of mayors at a public event. More than 1 million Brazilians took to the streets as the cost of living soars and economic growth forecasts drop. Protests escalated from anger over bus fare increases to discontent over corruption, the quality of public services and government spending priorities.

Annual economic growth during Rousseff’s term is forecast by analysts to average 2.12 percent, the slowest during a presidency since that of Fernando Collor, who was forced to resign over corruption charges in 1992. This contrasts with Lula’s record, in which growth averaged 4.1 percent over his eight-year tenure and reached 7.5 percent in his final year, while 40 million people were lifted from poverty.

That has prompted at least two allies of the ruling Workers’ Party, or PT, to consider alternate candidates in 2014, and legislators in the PT and its main coalition partner to openly criticize Rousseff’s economic policy.

The approval rating of Rousseff’s administration plummeted to 31.3 percent from 54.2 percent in June and a high of 56.6 percent in July of last year, according to an MDA poll published by the National Transport Confederation on July 16. It showed that 44.7 percent of those surveyed would not vote for Rousseff under any circumstance. MDA interviewed 2,002 people from July 7 to 10 and the poll has a margin of error of plus or minus 2.2 percentage points.

In an Ibope poll published by O Estado de Sao Paulo newspaper July 19, 41 percent favored Lula, the most popular president in Brazil’s history, in next year’s election, while 30 percent backed Rousseff.Lula, who was treated for throat cancer in 2011, has ruled out running in 2014. Rousseff declined to comment, according to an e-mailed response from the president’s press office. The talk of Lula’s return reflects dwindling confidence in Rousseff and is likely to continue over the next year, said Joao Augusto de Castro Neves, Latin America analyst at political risk consulting firm Eurasia Group.

Lula, whose past promises to suspend debt payments unnerved investors during his 2002 campaign, began to regain their trust by appointing Wall Street executive Henrique Meirelles to head the central bank and boosting interest rates to combat inflation. Under Rousseff, the central bank headed by Alexandre Tombini slashed rates to a record low 7.25 percent, only to see inflation surge above the 6.5 percent upper ceiling of the target range, undermining consumer purchasing power. Since April, policy makers have boosted the rate to 8.50 percent and indicated that the world’s biggest tightening cycle this year will continue. The bank targets inflation of 4.5 percent, plus or minus two percentage points.

Quicker inflation, increased family indebtedness and a drop in consumer and business sentiment have led to slower economic growth. Analysts in the latest central bank survey cut their 2013 GDP growth forecast for the 10th straight week, to 2.28 percent, and predicted 2.6 percent expansion in 2014. That contrasts with the 7.5 percent growth that helped make Brazil a Wall Street favorite in 2010, Lula’s last year in office.

Debt servicing costs that have doubled in seven years to 44 percent of household income, and annual inflation hovering around the ceiling of the target range, have eroded business confidence to the lowest in over four years. Consumer prices rose 6.4 percent in the month through mid-July from the year before.

Brazil’s unemployment rate jumped to 6 percent in June, the highest in more than a year, from 5.8 percent in May. That was higher than expected by all but one of 27 economists surveyed by Bloomberg, whose median estimate was 5.8 percent. First-half job creation was the lowest in four years. While Rousseff sought to emerge from Lula’s shadow early in office and accepted the resignations of several holdovers from Lula’s cabinet in the wake of corruption charges, she still consults him on a regular basis, including two private meetings following the street protests last month.

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CPFL Leans on Esteves to Revive Renovaveis IPO

Utility CPFL Energia SA (CPFE3) is depending on billionaire Andre Esteves’s Grupo BTG Pactual to raise at least 899 million reais ($400 million) at an initial public offering of its renewable-energy developer as investors shy away from Brazilian stocks.

CPFL Energias Renovaveis SA (CPRE3), which shelved an IPO last year, and its shareholders are seeking to sell at least 71.9 million shares for 12.51 reais to 15.01 reais each, according to a prospectus on its website. The developer of clean-energy projects from wind farms to forest biomass plants said it plans to release the deal’s results today. Investment bank BTG Pactual, the leading underwriter in the offer, agreed to buy as many as 40 million shares for 12.51 reais each should demand fall short, the company said.

The pledge from BTG, along with a similar commitment from Banco do Brasil SA (BBAS3)pension fund Previ to buy 31.9 million shares, is crucial to ensure the offer succeeds after two other deals were postponed last month. Airline Azul Linhas Aereas Brasileiras SA and cement maker Votorantim Cimentos SA delayed IPOs after Brazil’s sluggish growth, accelerating inflation and weakening currency pushed the Ibovespa benchmark stock gauge down 23 percent in 2013, erasing $248 billion in market value.

The company, known as CPFL Renovaveis, suspended an IPO last year because of the turmoil in global markets that followed the speculation that Greece could default on its debt and leave the euro area, Investor Relations Director Eduardo Takeiti said in a July 3 interview in Sao Paulo. The offering is more likely to go ahead today because it has two of the country’s biggest investors backing the deal, he said at the time.

CPFL Renovaveis is also better positioned to sell shares than it was in 2012 because more of its projects are producing electricity and generating revenue now, Takeiti said. It has almost doubled generation capacity to 1,153 megawatts since its August 2011 inception as a joint venture between CPFL Energia’s renewable-energy assets and local developer ERSA Energias Renovaveis. The company has 582 megawatts of capacity under construction, including 18 wind farms.

Press officials at BTG and Previ didn’t respond to phone calls and e-mails from Bloomberg News seeking comment on the deal. An official at CPFL Renovaveis declined to comment.

A 10-month surge in shares of Renova Energia SA (RNEW11), Brazil’s only publicly traded developer that focuses on wind farms, may bolster investors’ confidence in CPFL Renovaveis as the rival bucks a rout of hydro-power utility stocks, Maria Gabriela da Rocha Oliveira, a Sao Paulo-based analyst at Bloomberg New Energy Finance, said yesterday in a telephone interview.

Renova has jumped 56 percent in Sao Paulo since Sept. 11, when President Dilma Rousseff announced a plan to force large hydro-power companies to cut rates in exchange for license renewals that sent their shares plunging. State-run Centrais Eletricas Brasileiras SA, which holds most of the power dam permits being renewed under Rousseff’s plan, dropped 48 percent over the same span and CPFL Renovaveis’s parent lost 7.4 percent.

While BTG’s support may help CPFL Renovaveis sell the shares, the deal may not attract some investors because most of the funds will go to major shareholders instead of the company itself, said Rodolfo Amstalden, an equity analyst at consulting firm Empiricus Research.

The company is seeking to raise at least 350 million reais by selling 28 million new shares, while major shareholders including funds managed by private equity firm Patria Investimentos SA are selling 43.9 million shares valued at 550 million reais, based on the lower end of the offering’s target.

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Santander Brasil makes proposal to buy out GetNet

 

Santander Brasil SA, Brazil’s largest foreign lender, made public on Monday an intention to buy out acquirer GetNet Tecnologia SA from the company’s controlling shareholder, according to a securities filing.

The bank, a subsidiary of Spain’s Banco Santander SA, signed a memorandum of understanding with Ernesto Corrêa da Silva to explore a potential purchase of his stake in GetNet, which has about 5 percent of Brazil’s $320 billion merchant acquiring market, as the card payment processing industry is known.

The bank did not disclose terms of its proposal to Corrêa da Silva. Units of Santander Brasil, a blend of the bank’s common and preferred shares that is the lender’s most widely traded class of stock, rose 1.1 percent to 13.08 reais on Monday.

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