SABMiller surprises analysts with better-than-expected results

SABMiller, the world's second- biggest brewer, reported a resumption of quarterly volume growth as market conditions improved in Europe and North America.

The shares rose the most in almost a year after the London-based company said so-called organic lager volume rose 3% in the second quarter, reversing a 1% decline in the opening three months of the financial year.


SABMiller's performance was stronger than analysts anticipated, contrasting with distiller Diageo, which today posted revenue that missed estimates. While both companies delivered stronger-than-expected sales in developed markets, Diageo's growth in emerging regions was weaker than estimates.


SABMiller's sales were "impressive in the context of what is likely to be another muted quarter for consumer staples" Anthony Geard, an Investec analsyst wrote in a note. For Diageo, the main theme "is weakening emerging markets", Investec's Martin Deboo said in a separate report.


SABMiller rose as much as 5.1% in London trading, the steepest intraday gain since November 2012. The stock was up 4.2% at 3 167.5 pence as of 10.03am, while Diageo advanced 0.4% to 1 945.5 pence.


Conditions in both Europe and North America saw "a modest improvement" in the second quarter, SABMiller chief executive officer Alan Clark said.


'Strong performance' in Africa

Organic volume in Europe slid 4% in the first half compared with the median estimate for a 5% decline. The performance represented an improvement on the first-quarter's 7% decline, which was hurt by bad weather.

SABMiller said it achieved "a strong performance" in Africa, where volume rose 9% in the first half, and "good progress" in Latin America, South Africa and the Asia-Pacific region. The brewer gets the largest proportion of sales from emerging markets compared with its main rivals.

Volume rose 1 in Latin America, SABMiller's largest region, in line with estimates. Civil unrest weighed on improvements in Colombia, though sales in Peru returned to growth in the second quarter after tax increases.


Diageo said it saw "headwinds" in some faster-growing economies and missed analysts' estimates for sales in both Asia and the Africa, Eastern Europe and Turkey region. – Bloomberg



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