China weather dents SABMiller quarterly beer sales

SABMiller's lager volumes were 1% lower in its third quarter after a similar contraction in the first half of its financial year, ending in March.

In China, volumes fell 9% in the third quarter, following a 10% fall in the previous three months when bad weather over the peak summer season dented sales.

Wholesalers remained overstocked going into the third quarter and it weighed on orders during the three-month period, a company spokesman said.

Kagiso Asset Management investment analyst Dirk van Vlaanderen said: "While China contributes around 20% of SABMiller's group volumes, it only adds around 3% to group operating profit and so the unexpected Chinese volume decline in quarter three is unlikely to have a significant profit impact at a group level."

SABMiller said its group net producer revenue, or sales less excise and similar taxes, grew 4% in the third quarter. Continuing a previous trend, lager volumes were down 1% while soft drink sales remained buoyant, with volumes up 4% in the quarter.

SABMiller CE Alan Clark said the firm's Latin American and African businesses "continued to grow both volumes and revenues, together with Europe, while more difficult trading conditions, particularly in China, held back the overall group performance".

In Colombia - SABMiller's single most profitable market where its share of beer is about 98% - net producer revenues grew 5% with overall beverage volumes up 1%, held back by a 1% decline in lager volumes.

SABMiller is preparing to deal with a fresh wave of competition in Colombia, as soft drinks group Postobón and Heineken- controlled brewer Compania Cervecerias Unidas eye a share of the market from a brewery they are developing.

SABMiller said lager volumes in the country were "impacted by a shift in consumer spending patterns, along with pressure on disposable income driven by increased levels of household debt and rising inflation".

SABMiller's lager volumes were up most in Africa, with growth at 3%.

In SA, which was consolidated under SABMiller's Africa region from July last year, net producer revenues grew 6%, "driven by positive pack and brand mix in lager". Both lager and soft drinks volumes grew 2%.

The fastest growing African countries for the brewer were Mozambique, where net producer revenue was up 26% on a 21% jump in lager volumes; and Nigeria, where net producer revenue grew by a third.

Van Vlaanderen said SABMiller's third-quarter numbers "were a bit of a mixed bag" with Latin America and Africa offsetting weaker performances in North America, the Asia-Pacific region and Europe.

"The negative impact of a strong US dollar against SABMiller's key currencies meant reported sales actually fell by 5% in quarter three. We remain concerned that some of SABMiller's key emerging markets remain vulnerable to slower growth rates and further currency weakness given their dependence on oil and other global commodities."

While some severe currency devaluations were already evident, "we believe the inevitable consumer slowdown in these regions makes the growth outlook challenging in the quarters ahead", Van Vlaanderen said.

Source: Business Day via I-Net Bridge