Anheuser-Busch InBev , the world's largest brewer, said cost cutting had helped it beat analyst forecasts for second-quarter profit, although the second half of the year would be significantly weaker.

AB InBev has described beer as resilient in the face of the global economic slump, although the industry has seen consumers trading down from premium to cheaper brands, and opting to drink at home instead of the pub.

We have strong operating momentum going into the second half of 2009, but recognize that many challenges remain. The beer industry, while resilient in most of our key markets, is not immune to economic pressures, Chief Executive Carlos Brito said in a statement.

The maker of Budweiser, Stella Artois and Beck's beers said earnings before interest, tax, depreciation and amortization (EBITDA) rose 18.5 percent to $3.596 billion, compared with the average $3.221 billion in a Reuters poll of 15 analysts.

Overall cost of sales decreased by 5.6 percent in the second quarter, or 2.4 percent per hectoliter, thanks to brewery productivity enhancements, the group said.

The brewer said it projected cost of sales per hectoliter to run flat or increase by low single digit percentages over the full 2009 year, which was somewhat more optimistic than previously anticipated.

It had benefited from lower spot prices for its non-hedged input costs -- the cost of ingredients such as malting barley, other grains and hops -- after a sharp rise in prices last year, it said.

By 5 a.m. EDT, AB Inbev shares had dropped 3.7 percent to 27.7 euros, against a 0.9 percent fall for the DJ Stoxx Europe food and beverage sector <.SX3P>. Shares in Heineken , which reports on August 26, were down 3 percent.

The market is reacting somewhat negatively to the group's outlook, said KBC analyst Wim Hoste, adding, however, that this reaction was a little exaggerated given the strong second-quarter EBITDA performance.

The company, reporting in dollars from this year, said second-half year-on-year EBITDA gains would be significantly below the 18.5 percent achieved in the second quarter of 2009, primarily due to more difficult comparisons.

Analysts were positively surprised by the group's improved guidance for cost of sales.

In a market which is going down it is very good that they can keep their costs under control, Petercam analyst Kris Kippers said.


The company said second-quarter volumes fell by 1.1 percent, against overall expectations for a 1 percent drop.

Volumes grew 7.0 percent in Brazil but fell 8.9 percent in Central and Eastern Europe (CEE) due to weak market demand and market share loss in the value segment. CEE nevertheless saw EBITDA growth of 39 percent in the second quarter as a result of price improvements, lower cost of sales and lower distribution costs, the group said.

World number two SABMiller's underlying beer volumes were flat in the second quarter, while those of Carlsberg , the fourth biggest brewer, fell by 6 percent on a like-for-like basis.

AB InBev repeated its goal of bringing in merger savings of $1 billion in 2009, and said the second quarter had yielded $315 million, bringing the total for the first half of 2009 to $610 million.

The brewer's shares have more than doubled since a November low, when debt concerns and a rights issue weighed them down.

The company gave no news on further divestments. It has so far raised about half of its $7 billion target. Banking sources say it is currently looking to sell assets in seven central and eastern European countries.

Chief Financial Officer Felipe Dutra declined to comment on further divestments.

We have several files moving in parallel and we are carefully considering each and every one of them, Dutra told a conference call.

(Reporting by Antonia van de Velde; editing by John Stonestreet and Simon Jessop)