Global brewing giant SABMiller posted a strong performance across the group in the six months ended September 30, growing market share in each of its business segments.
And CE Graham Mackay believes the group’s businesses are benefiting from strengthening market positions and improving mix, and with increased investment are well placed to deliver sustainable organic growth.
Presenting a review of the group’s performance over the past six months, Mackay said the group had continued to build its business with acquisitions in China and Romania, while making significant investments in brand marketing, channel development and brewing infrastructure.
In North America, he said, results from Miller Brewing Company are beginning to reflect the wide-ranging actions taken to turn around the business.
Volume growth resumed and earnings before interest, tax, depreciation and amortisation (Ebitda) rose 23%. He said improved brand building together with sales and distribution initiatives resulted in strong growth from Miller Lite — the largest brand in the portfolio.
Building on the improvements to date, the Miller management team will continue to focus on the recovery and medium-term growth of the business.
In Central America, earnings recovered from the low levels seen last year, and local management is focusing on strengthening the brand portfolios and improve distribution for beer and carbonated soft drinks (CSDs).
The European business delivered a 17% rise in Ebitda, with 11% organic growth in constant currency terms. The results were achieved despite cooler and wetter weather than the previous summer. Strong volume growth in Russia and a significant improvement by Poland in the second quarter more than offset volume decline in Italy, Hungary and Slovakia, he said.
Africa produced “pleasing” Ebitda results, reflecting revenue management and operational performances in the key markets of Botswana and Tanzania and an increase contributed from Castel, he said. CSD volumes grew significantly in Angola as new capacity was commissioned.
In China, SABMiller’s associate China Resources Snow Breweries further consolidated its position in that country through the acquisition of a green-field brewery site in Dongguan in Guangdong province and the acquisition of the former Lion Nathan breweries.
In South Africa, Beer South Africa increased its share of total alcoholic drinks market to 59,8%, with volume growth across all sectors of the beer market and a notably strong performance in the premium sector. ABI grew beverage volumes by 8% in the period.
Higher volume and robust pricing management led to good growth in earnings, which has been enhanced by favourable currency movements.
Mackay said that the South African economy looks well set and stable, and he sees no looming reason why the rand will crack. For the six months ended September, SABMiller’s beverage volumes were up 8% at 100-million hectolitres, while lager beer volumes were up 8% to 82-million hectolitres, including organic growth of about 5%.
Reported Ebitda of $1,141-million — up 28% — reflects strong operating performances with improved pricing and mix in key markets. On an organic, constant currency basis, Ebitda increased 21%.
Adjusted earnings are up by 38%, to $583-million, with adjusted earnings per share of 48,8 US cents, also up 38% on the first six months of the prior year.
An interim dividend of 12 US cents per share, a 60% increase, will be paid to shareholders. This partly reflects the growth in earnings and an intention to raise the interim dividend as a percentage of the full year dividend, Mackay said.
Looking ahead, Mackay said the rate of reported earnings growth achieved in each of the past three six-month reporting periods has been particularly strong.
“Miller’s turnaround progress, our Central American restructuring late in the previous financial year and favourable currency movements are together providing more stretching comparables for this year’s second half.
“At the same time, SABMiller is increasing its investments in brand marketing and facing higher global commodity costs. Our businesses are, however, benefiting from strengthening market positions and improving mix, and with increased investment are well placed to deliver sustainable organic growth,” he concluded. — I-Net Bridge