reuters.com Mon February 24, 2003 10:51 AM ET (Recasts with details, analyst comment, background, share price)

By Nicholas Winning

SAO PAULO, Brazil, Feb 24 (Reuters) - Brazil's AmBev ABV.N AMBV4.SA , the world's fifth-largest brewer, on Monday posted slightly stronger-than-expected fourth quarter earnings as price rises and cost cuts offset a drop in sales volumes.

Companhia de Bebidas das Americas (AmBev) failed last year to match 2001 sales volumes as Brazil's economy posted sluggish growth, although a drive to expand into new Latin American markets helped it bolster international beer sales volumes.

Although sales were stronger in the last three months of the year than they were over the same period in 2001, the volume of beer sold in Brazil dropped 1.7 percent in 2002 while soft drink volumes fell 1.1 percent.

Nevertheless, price hikes in October to compensate for higher dollar-linked ingredients and packaging costs, coupled with greater direct distribution, and more sales of premium and new more expensive niche brands, boosted Brazil beer revenues.

Costs of beer sold fell due to "better U.S. dollar prices for aluminum cans, malt and hops, as well as a shift in the packaging toward returnable bottles," AmBev said in a statement.

Fourth quarter earnings before interest, tax, depreciation and amortization (EBITDA), the gauge of operating performance many analysts focus on, jumped to 1.1 billion reais ($304.6 million) from 761.5 million reais in the year-earlier period.

The market expected the company, which was formed from the 2000 merger of Brazil's two biggest beverage firms, to post EBITDA of 1 billion reais, according to an average of five forecasts collected by Reuters last week.

Fourth quarter net profit leaped to 431.4 million reais from 178.7 million in the same period in 2001. That fell short of the analysts' average forecast of 653 million reais after the firm unexpectedly hiked its provision for taxes.

"The operational side was above what we were expecting, and they made a much bigger provision for tax than they normally do which is why the net profit was below expectations," said Fabio Zagatti, an analyst at HSBC CTVM Research.

AmBev stock dipped 0.4 percent to 513 reais in early trade in Brazil. The country's benchmark Bovespa .BVSP stock index was 0.5 percent higher at the time. AmBev's stock has lost 5 percent of its value this year, while the Bovespa is about 8 percent weaker.

ALREADY RECOUPING BRAZIL BEER MARKET SHARE

AmBev's share of the Brazilian beer market fell to 67.1 percent at the end of December from 70.1 percent at end-September and 68.5 percent in December 2001, but it said it had started to recover some of the lost ground this year.

"During the (fourth) quarter the decline was concentrated in supermarkets, and is the effect of strong discount levels in the marketplace," AmBev said. "We already recovered some market share in early 2003, reaching 67.9 percent."

AmBev's beers include Skol Pilsen, the third-biggest selling brand in the world. It also makes Brahma, Antarctica and Bohemia. Its main rival is Kaiser, brewed in Brazil by Canada's Molson Inc MOLa.TO with Dutch giant Heineken NV HEHN.AS .

AmBev's share of the Brazilian soft drink market, where it trails Coca-Cola Co. KO.N , dipped to 16 percent from 16.6 percent in September. The firm's main soft drink is Guarana, a sweet fizzy pop made from an Amazon berry of the same name.

Although AmBev sold more beer abroad in the fourth quarter of 2002 than in the previous year, currency depreciations in Argentina and other countries reduced earnings while a general strike and political crisis in Venezuela hit sales there.

A near-6 percent strengthening of Brazil's currency, the real BRBY , in the fourth quarter gave AmBev a financial gain. It raised prices to counter cost increases linked to the real's 35 percent slump over 2002.

AmBev has nevertheless continued to expand across Latin America through an alliance with Argentina's top brewer Quilmes Industrial QUIN.LU , which will give it greater access to Argentina, Bolivia, Paraguay, and Uruguay, and a plan to build a brewer in Peru by early 2004.

AmBev executives have scheduled a conference call to discuss the results on Wednesday.

($1 = 3.62 reais)

www.guelphmercury.com Monday February 23, 2003 - 12:25:08 EST CP Archive

Canadians are facing sticker shock on a slew of products, from gasoline to heating costs, bread, milk and other basic grocery items, and it could put a deep dent in their budgets. (CP Archive)TORONTO (CP) - Canadians are facing sticker shock on a slew of products, from gasoline to heating costs, bread, milk and other basic grocery items, and it could put a deep dent in their budgets.

Gas pump prices are already at 90 cents a litre in some parts of the country and the rising crude oil price to more than $35 US a barrel - related to war fears and Venezuela's general strike - has caused a spike in home heating fuel during what's been a bitterly cold winter across most of Canada.

Natural gas prices are also on the rise.

Now skyrocketing transport costs are trickling into the prices consumers pay for products such as fruits and vegetables that get shipped into and across the country. And last year's drought has put upward pressure on grain prices.

That affects livestock feed costs and flour prices, which in turn boosts the cost of bread and meat.

Car-loving Canadians traditionally gripe about the cost of gasoline, but with pump prices edging ever closer to the dreaded $1-a-litre level, there's good reason.

For some, that means the car will have to be left in park.

"I'm on a very strict budget and, because of that, I can only spend $40 a month on gas," said Dave Steeves, who works at a communications company in Toronto.

Because of rising fuel prices - adding $10 to $15 to the cost of filling up his car, "now what's going to happen is I'm not going to use the car," he said.

Last month the car sat idle for the final two weeks of the month because it had guzzled up its budgeted quota, Steeves said. That will likely happen this month too, he added, which is a frustrating situation.

As a result, Steeves is walking to get groceries and to take his two children places. And he's relying on friends to help him get to work and his hockey games.

"If I vary from (my budget), then something else won't get paid," he said, adding that although the government could shift taxes away from gasoline, it would just show up somewhere else.

As for the cost of groceries, "what else can you do but suck it up and move on?" he commented.

So far, prices on fruits and vegetables haven't gone up much, but that's expected to change if gasoline prices stay at elevated levels.

Ralph Boyd of the Atlantic Provinces Trucking Association said prices of fresh fruit and vegetables from California, Florida and the southern states will rise most quickly and most steeply, "simply because transportation is a large part of the cost of those goods."

Boyd said there's a looming crisis in Atlantic Canada because few trains come to the region and air freight is uneconomical, so trucks account for about 95 per cent of consumable goods brought into the area.

Earlier this month, gasoline prices took a hike of 12 to 13 cents a litre across New Brunswick, the largest increase in the country. It's only a matter of time before those higher bills get passed down the line.

"We can't absorb those costs. We have no choice but to pass them on to the users of our service," Boyd said.

Although grocers try to keep those price spikes from hitting the shelves immediately, it's impossible to remain in business without charging more when costs escalate, said Mike Apostolou, the manager at Sun Valley Fine Foods in Toronto.

"The companies have to raise their prices sooner or later," he said. "Some try to hold off as much as possible but it comes to a point where they say, 'We're going to go belly-up if we don't raise it.' "

In recent months the cost of milk, cream, flour, cookies, bread and related products, has risen, Apostolou said.

"The consumer is going to be spending more money to buy staple items like milk, eggs, juice, bread."

Bread prices are up about a nickel or so per loaf, although that depends on the product, said Geoff Wilson, a spokesman for grocery giant Loblaw Co. and breadmaker Weston, an affiliate company. But producers have been trying to keep costs from hitting product prices, he said.

On Friday, Maple Leaf Foods reported lower fourth-quarter profits partly because of higher feed costs for its meat operations. Meanwhile, its Canada Bread bakery division - which makes the Dempster's, Olivieri and Tenderflake brands - passed on wheat price increases to its customers.

Pete Luckett, the Cockney grocer who transformed a small fruit and vegetable operation into a popular Atlantic Canada chain, said he's trying to hold off raising prices to deal with higher transport costs.

But "if it continues to go crazy, it has to happen sometime," he said.

Although customers say higher costs haven't shown up in a major way at the market, they expect the price shock to come soon. And when fruits and vegetables get too pricey, "I just won't buy them," said Halifax shopper Lynn Brooks,

A price crunch will force her and her neighbours to make tough choices in their shopping and eating patterns, she said, by using frozen vegetables or simply not buying items when the price skyrockets.

"When lettuce went up to over $2 a head last year, I didn't buy it unless it was a treat."

The rising food bill for others has meant cutting back on other areas.

Chris Lee, a construction worker in Vancouver, said he has to eat properly, so his social life suffers when food costs soar.

"More money on food means less cash on the weekends. I stay home more," he said. "I do drive to work and, yeah, after groceries and gas there's not much left for the weekend."

Facts about recent price increases:

Energy prices: Up 7.1 per cent in December 2002, compared with December 2001, according to Statistics Canada's consumer price index. In November, the increase was 14 per cent. In December, gasoline prices rose 20.8 per cent and fuel oil prices increased 17.2 per cent.

Gasoline prices: Canada's average regular gasoline price topped 82 cents a litre last week. In 2001, the low was 55.9 cents, the high 80.4 cents. In 2002, the Canadian average ranged from a low of 56.4 cents to a high of 75.5 cents, says research by MJ Ervin & Associates.

Food prices: In December, fresh vegetable prices soared five per cent, mainly due to a big jump in the cost of tomatoes and increased demand during the holidays.

Food prices rose on average 2.6 per cent in 2002 after a 4.5 per cent increase in 2001. The increases in 2002 were due to higher costs for fresh vegetables, especially potatoes, milk products, bakery products, beef and fresh fruit, says Statistics Canada.

Grain prices: Have been rising since the middle of last year after the drought in Canada, the United States and Australia caused grain stocks to drop substantially. In 2002, wheat prices rose by 12 per cent. When prices peaked in September 2002, they were up 49 per cent year-over-year, says Kenrick Jordan, a senior economist with BMO Financial Group, who tracks agriculture product prices.

BMO forecasts that these prices will continue to rise, up about 15 per cent this year.

Dairy prices: Higher feed and fuel prices have led to an increase in the price of dairy products. The Canadian Dairy Commission increased its support prices for milk producers, a price used to determine the price of fluid milk, so their return is expected to rise by 3.9 per cent to deal with higher costs. In 2001, the support price increased and was expected to increase the dairy farmers' return by 1.7 per cent.

Here are some comments from consumers about how higher gas, heating, and food prices are affecting them:

"I don't buy many packaged foods any more, like pre-made salad or fancy biscuits. It would be nice to, but on a fixed income you have to be very careful. And I live on my own, so everything is so expensive. It's a worry, so you just buy basics, milk and bread." - Beth Doe, a widow living on a pension in the west end of Vancouver.

"Well living downtown, rent is so much higher, so I do have to cut back on my groceries quite a bit. I share costs with my roommates, but it still seems horrendous. If I didn't work in a restaurant on the weekends how would I be able to afford this bag of groceries . . . this bag cost over $30. Yikes. How did it get to be that high? One bag?" - Lisa McIntyre, a student in Vancouver.

"Heating costs, I've noticed, especially with this winter. It's been brutal. But you just have to bite the bullet and hope it ends soon." - Sonia Haynes, an account manager with an insurance firm in Toronto, who says gas prices are "ghastly" but she's fortunate that most of those costs are covered by her company as part of her job.

new.stockwatch.com 2003-02-24 10:47 ET - News Release

HOUSTON, Feb. 24 /PRNewswire-FirstCall/ -- Harvest Natural Resources, Inc. will release its 2002 fourth quarter operational and financial results before the market opens on Thursday, February 27, 2003.

The Company will hold a conference call at 10:00 a.m. Central Time on Thursday, February 27, 2003, during which management will discuss the Company's 2002 fourth quarter results. The conference leader will be Dr. Peter J. Hill, President and Chief Executive Officer. To access the conference call, dial 785-832-1077 five to ten minutes prior to the start time. A recording of the conference call will also be available for replay at 402-220-1115 until March 6, 2003.

The conference call will also be transmitted over the Internet through the Company's web site at www.harvestnr.com or www.firstcallevents.com . To listen to the live webcast, enter the web site fifteen minutes before the call to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay of the webcast will be available beginning shortly after the call, and will remain on the web site for approximately 90 days.

Harvest Natural Resources, Inc. headquartered in Houston, Texas, is an independent oil and gas exploration and development company with principal operations in Venezuela and Russia. For more information visit the Company's website at www.harvestnr.com .

CONTACT: Steven W. Tholen Senior Vice President, Chief Financial Officer (281) 578-8020

This press release may contain "Forward-Looking Statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this release may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Actual results may differ materially from the Company's expectations due to changes in operating performance, project schedules, oil and gas demands and prices, and other technical and economic factors. Audio: www.firstcallevents.com Natural Resources, Inc.

CONTACT: Steven W. Tholen, Senior Vice President, Chief Financial Officer of Harvest Natural Resources, Inc., +1-281-578-8020

Web site: www.harvestnr.com

www.computerworld.com By CAROL SLIWA FEBRUARY 24, 2003 Content Type: Story Source: Computerworld

Microsoft Corp. is counting on the virtual machine software that it acquired last week from Connectix Corp. to appeal to Windows NT Server 4.0 users who are interested in server consolidation and migration.

The Connectix Virtual Server software lets users run multiple distinct copies of server operating systems—including Windows, Linux and Unix—on a single physical machine.

But it's unclear how receptive users will be to the new Microsoft offering, since it won't become generally available until year's end and its arch competition, GSX Server from VMware Inc. in Palo Alto, Calif., has been shipping for more than two years.

San Mateo, Calif.-based Connectix recently said its Virtual Server product would ship this quarter. But Jim Hebert, general manager of Microsoft's Windows server product management group, said security and code reviews, tuning and localization work will cause Microsoft to delay the product until the fourth quarter.

"Do I wait? They've never hit a deadline yet," said Tom Pane, a vice president of technology at New York-based AnnTaylor Stores Corp., which has been exploring server consolidation with VMware.

Cognizant that support is winding down for Windows NT Server 4.0, Pane said that the retailer has already begun its conversion to Windows 2000 and that he doesn't want to wait until next January to get off of NT.

"If they came out tomorrow with it, I'd buy it and evaluate it right away, because it solves my problem of trying to at least consolidate testing environments," Pane said.

Diane Greene, CEO of VMware, acknowledged that Microsoft had approached her company and that there were some discussions, but they didn't come to an agreement. She said VMware already has thousands of customers, adding that Microsoft's acquisition of Connectix "just amplifies our focus on delivering and continuing with our innovation and quality and providing full choice for our customers."

"It's a pretty large market," Greene said.

Tony Adams, a technology analyst at J.R. Simplot Co. in Boise, Idaho, said his company pared 30 physical servers to five boxes running VMware's GSX software during the past eight months. That move helped the company reduce the time needed to purchase, configure and deploy a server from two weeks to a couple of hours, according to Adams.

The company was so happy with the consolidation project that it's now planning to deploy 15 to 20 physical servers running VMware software for new applications.

Adams has seen Connectix, but he said Microsoft "would really have to do a much better job to win us over," since VMware has been a great fit. Plus, Adams said, he runs VMware's GSX software on Linux—something he wouldn't be able to do with the new Microsoft product.

Alejandro Bombaci, CIO at Empresas Polar, a consumer goods manufacturer and distributor in Caracas, Venezuela, said he would prefer to see hardware makers or third parties provide the virtual machine functionality, "so there will be more independence on the support for each operating system under the partitioning software."

Despite those sentiments, some analysts said they anticipate that many users will be more comfortable going with Microsoft's virtual machine software.

"You really want one vendor to deal with when you're dealing with operating systems," said Rob Enderle, an analyst at Cambridge, Mass.-based Giga Information Group Inc. Plus, Enderle said, he expects Microsoft to eventually build the virtual machine software into its operating system "to the point where they're almost giving the stuff away."

Hebert said that over time, the product might be included with the operating system. Virtualization software has become an increasingly popular consideration for Microsoft users coping with the problem of Windows server sprawl, since the software can help them reduce hardware expenses and operating costs.

"We were hearing from customers that getting a supportable virtual machine solution from Microsoft would be an attractive thing," Hebert said.

NT Server users often run a single application on each of their Windows servers, either because software vendors require it or because they worry that problems with or changes to an application will cause others to crash.

Hebert noted that as a result, much of the hardware running Windows NT Server 4.0 has gone underutilized. Yet because the hardware is nearing the end of depreciation schedules, some customers want to replace it, he said.

Rather than moving Windows NT applications onto new hardware that will be even more severely underutilized, the user can move it to new, faster hardware running the Virtual Server product, Hebert said. That would let several Windows NT servers be consolidated on a single box.

And there's an added benefit for Microsoft. Hebert noted that the Virtual Server software requires its own underlying operating system, and Microsoft hopes customers will choose to run the Virtual Server software on Windows Server 2003, due in April.

But not every company will be rushing to do Windows server consolidation. Jim Prevo, CIO at Green Mountain Coffee Roasters Inc. in Waterbury, Vt., said companies pay a premium for the larger servers. Plus, he said he would rather have less functionality off-line if a server crashes or needs to be taken down for an application upgrade.

Rick Stiegler, chief technology officer at Lending Tree Inc. in Charlotte, N.C., said his company's applications perform better on two-way servers than larger four-CPU boxes, so consolidation isn't in his company's plans.

Shopping List Microsoft last week acquired three software products from Connectix, in addition to its engineering and support teams. Virtual Server: Native Windows-based server application that enables users to run a broad range of operating systems in virtual machines - including Windows, Linux, Unix and OS/2 - concurrently on a single physical Intel server. Product is currently in beta-testing phase.

Virtual PC for Windows: Client software that allows users to run multiple PC-based operating systems - including Linux, NetWare, OS/2, Solaris and Windows - and applications simultaneously on a single workstation.

Virtual PC for Mac: Client software that lets Macintoshes run Windows applications, access PC networks and share files with PC-based users. Product provides functionality and compatibility of a Pentium PC through software emulation of the standard Intel chip set and other hardware components.

southflorida.bizjournals.com Robin Londner  

Coral Gables-based consultant firm Intellichem said Venezuelan workers are gradually going back to their jobs as of this month, but it also said oil workers have decided to continue their strike to press for early election.

The continuing labor problems in Venezuela's oil industry concerns South Florida because the majority of the petroleum that arrives at Port Everglades is from refineries in Venezuela, the Gulf of Mexico, Aruba, the Bahamas and Mexico. More than 1,000 petroleum tanker-trucks leave the port every day.

The Broward County port is the second-largest East Coast non-refinery center for petroleum products. In fiscal year 2001, the port processed 117.9 million barrels of fuel, or 16.77 million tons.

Problems in Venezuela and other countries have also hurt the Port of Miami. When that port released its container totals for fiscal year 2002 in November, the struggling economies of Venezuela, Argentina, Brazil, Uruguay and Chile pulled down overall tonnage from South America by 12 percent.

Fuel costs have also impacted the costs consumers pay for fuel. For businesses such as trucking and aviation that depend on fuel prices, problems in Venezuela continue to drive up fuel prices. Earlier this month, travel organization AAA blamed the continuing loss of oil and gasoline imports from Venezuela for lowering fuel inventories, but also said nothing fully justifies the dramatic increase in gasoline prices consumer are seeing across the United States.

Up about 13 cents from the middle of January, as of Feb. 11, AAA put gas prices at $1.60 a gallon. The price was the highest since June 2001 when the average price was $1.66 and the highest February price ever recorded by AAA.

Florida Attorney General Charlie Crist has indicated he thinks those prices are too high. Last week, he sent a letter asking the Federal Trade Commission to see if gasoline sellers are colluding to increase prices in the state.

"The recent spike in fuel prices is startling," Crist said.

Also last week, Juno Beach-based FPL Group (NYSE: FPL) made it clear it wants the state to help it with fuel costs. The utility cited U.S. and world events as driving up prices its electric subsidiary, Florida Power & Light Co., must pay for fuel. Because of these increases, FPL Group asked the Florida Public Service Commission to approve a 6.2 percent increase on residential bills, a 7.3 percent increase on commercial bills and an 11.6 percent increase on industrial bills, all beginning in April.

FPL Group said the average price it expects to pay for a barrel of oil to generate electricity is 8 percent more this year than last year. FPL Group said it expects to spend nearly $3 billion for fuel in 2003, but did not give a figure from last year for comparison.

"What is happening to fuel prices from events around the country and around the world has been a tremendous frustration to our customers and all of us at FPL who have worked so hard to keep our operating costs down in order to keep bills low," said Paul Evanson, FPL president.