InBev disappoints but sees better second half

BRUSSELS (Reuters) - InBev INTB.BR, the world's second-largest brewer, reported lower than expected first-quarter earnings on Thursday, as volumes declined and costs rose, but it forecast improvement in the second half.

The Belgian beer maker said EBITDA (earnings before interest, tax, depreciation and amortisation) was 982 million euros (769 million pounds), against 962 million euros a year earlier, but only a like-for-like increase of 0.7 percent.

The average forecast in a Reuters poll of eight analysts was 1.06 billion euros.

Worldwide volumes fell by 0.4 percent, although revenue rose 4.8 percent to 3.20 billion euros, less than the 3.23 billion euros analysts had expected.

Beer sales fell in key market Brazil, partly due to inflation, an early Carnival holiday season and poor weather conditions. In eastern Europe, another key driver of growth last year, volumes were off 5.7 percent.

Cost of sales grew by almost 10 percent. InBev said weighted average inflation in the countries in which it operated was moving towards a 5-6 percent range, higher than the 4 percent it had foreseen.

InBev, maker of Stella Artois, Beck's and Brahma, said results in subsequent quarters would be better, with growth of its EBITDA margin to resume in the second half.

It added it was confident the Brazilian beer market would return to growth in the rest of the year.

InBev repeated that 2008 would be more challenging than the previous three years and comparisons would be tough, particularly in the early part of the year.