If GST rise, Ambev can close factory

Ambev reported on Friday that it intends to pass on the price increase of taxes is made in the State of São Paulo in Brazil. The company also does not discard reduce shifts or close factory in the State, if the increase in the tax burden leads to big drop in demand.
"In an environment where the company suffers higher inflationary pressure, with higher cost in the production, there's no way to absorb increased tax burden. Ambev will pass any tax increases in prices, "said Nelson Jamel, Vice President financial and investor relations officer of Ambev.
The São Paulo State Government discusses the Legislative Assembly an increase of ICMS on beer of 18% to 25%. The Brazilian Association of bars and Restaurants (Abrasel) says that the increase in tax charge of 40% would result in a 20% increase in the prices of beer and the possible closing of 85 thousand establishments in the State.
Jamel stated that, if the increase in the rate of GST is approved, Ambev and other breweries have drop in sales. As a result, Ambev would reduce production shifts in São Paulo, and could close units.
Ambev in the third quarter of the year had 4.9 percent advance in net profits, to 2.95 billion R$. Net sales advanced 24.6% to 10.745 billion R$. Sales volume rose 0.2%.
Jamel noted that sales of lines of high added value, such as beers Budweiser, Stella Artois and Original, grew two digits representing 9% of total revenue, compared with 6% in the third quarter of last year.