InBev feels pressure of rising cost of hops, malt

Although brewing giant InBev’s profits increased in the third quarter, its stock took a hit because those were short of expectations – and the company warned that the increasing cost of ingredients will cut into profits next year.

The company reported rising sales in Latin America and Russia while sales in western Europe slumped. Sales were down 11% in Germany, in part because numbers were compared to 2006, when the country hosted the World Cup in Germany. Sales in Belgium decline 9.6%.

Volumes were up 10.7% in central and eastern Europe, with Russia growing by 14% and Ukraine by 14.9%. Latin America sales increased 7.3%.

Chief Executive Carlos Brito blamed the weaker-than-expected performance primarily on poor sales in the U.K. and China and the rising cost of raw materials that include malt and aluminum.

Although he expressed optimism about the fourth quarter, InBev company warned that increasing commodity prices, especially for barley and malt, will affect all its business units in 2008.

Business details from CNNMoney.