/ 19 January 2012

SABMiller sales ride high on emerging market growth

Global brewer SABMiller reported a 3% rise in beer volumes in the last three months of 2011, as growth in African and Latin American markets helped offset falls in North America and Europe.

The world’s second-largest brewer and maker of Miller Lite, Peroni and Grolsch also said on Thursday that beer price rises helped the group to push up its underlying revenue in its October to December third quarter by 7%.

The London-based group said overall its financial performance was in line with its expectations as price rises help offset moderate rises in raw materials like barley, wheat and corn and analysts look for flat profit margins for its year.

But beer volumes at its newly-acquired Foster’s Australian business dipped 6% in the quarter and although not included in its overall figures showed the challenge faced by Foster’s new chief Ari Mervis in such a difficult market.

SABMiller makes 70% of its profits in emerging markets and therefore has a lower exposure to flat Western beer markets than its three big rivals Anheuser-Busch InBev, Heineken and Carlsberg.

Investors were looking for a 3% rise in underlying third-quarter volumes, based on a Reuters survey of 10 brokers. This was after a similar April to September first-half rise made up of a strong first quarter, ahead 5%, and a flat second quarter hit by rain and cold weather in China and East Europe.

Positive highlights
SABMiller shares edged up 0.1% to 2 299 pence in a slightly higher London stock market by 8.40am GMT, having already risen 10% from a low in late November of 2 075 pence.

Analysts said the update was generally positive highlighting the group’s big emerging market exposure and wide geographic spread, but there were some concerns over its mature markets.

“The regional split still strikes us as a mixed bag, with positive growth in emerging markets offset by negative volume momentum in Europe, USA and the newly acquired Foster’s business,” said analyst Martin Deboo at Investec Securities.

The brewer which also makes Castle, Snow, Pilsner Urquell and Aquila beers said third-quarter underlying volumes rose 11% in Africa, were up 8% in Latin America, 7% ahead in Asia Pacific and 2% firmer in South Africa.

Europe remained weak with a quarterly 2% fall, and in the United States — where it operates through its MillerCoors joint venture — sales to retailers fell 3.3%.

The brewer has been busy deal-making, buying Foster’s last month for $11.9-billion, swapping its Russian and Ukrainian units last October for 24% of Turkey’s Anadolu Efes, and this month saying it would be keen to buy Castel’s African brewing business in a potential $10-billion deal after forging closer ties with the private French group.

Other big brewers report the October to December quarter and 2011 results over the coming weeks with Heineken due to issue results on February 15, Carlsberg on February 20 and the world’s largest beermaker AB-InBev on March 8. — Reuters