Ambev can seek targets in AL as Brazil slows down

Ambev probably will seek acquisitions in Latin America as growth slows in its domestic market in Brazil, said analysts at Goldman Sachs Group in a report.
Ambev, Latin America's largest brewery, currently generates 65 percent of its revenue and 71 percent of its operating profit in Brazil. Even if organic expansion is still possible, Ambev would fare better at buying smaller rivals to combat competition from SABMiller, analysts said led by Luca Cipiccia in a note on Tuesday.
Cipiccia and his team expect the volume of sales and profit growth slow in Brazil after the World Cup, which runs until July 13.
While the volumes of Ambev in Brazil can be strong this year, thanks to a favorable annual comparison base and a heat wave that boosted the consumption of beers, a slowdown is expected in the second half of 2014 and in 2015.
"The directors of Ambev could be encouraged to accelerate growth in the region and rebalance the mix of business outside of the domestic market," said the note. "However, significant opportunities for organic expansion and acquisitions Ambev's current markets are scarce and limited in size, taking into account their already dominant positions".
Ambev is a unit of Anheuser-Busch Inbev, the largest brewery in the world. The company's shares lost 0.5 percent to 15.95 reais, the 02:02 pm, with the Ibovespa index retreating 0.32 percent.