Subscribe & Follow

Advertise your job vacancies

Cold winter weighs on SABMiller's lager sales

23 Jan 2013

SABMiller (SAB)‚ the world's second-largest brewer‚ reported a less than expected 2% rise in lager volumes on Tuesday, 22 January 2013, representing a slowdown from the 3% growth rate recorded last year and 4% gain in the first half, as an "exceptionally cold and wet winter" across China subdued demand. Soft drinks volumes were 3% higher.

The maker of Miller Lite‚ Grolsch and Peroni Nastro Azzuro said revenue rose 8% in the quarter‚ before acquisitions and disposals and at constant currencies.

Chris Wickham‚ an analyst at Oriel Securities in London‚ said that while the data disappointed in terms of volume‚ the group beat revenue expectations as discounting eased and pricing was firm.

"Moreover‚ it is only one quarter's worth of volume. As a result‚ double digit earnings per share growth remains achievable. In particular‚ the company has greater momentum on cost reductions than before‚" Wickham said.

SABMiller said: "Overall‚ financial performance for the quarter was in line with our expectations."

Offsetting the effects of declines in mature markets such as Europe‚ where tough economic conditions prevail‚ the brewer continued to benefit from emerging markets‚ where it earns around 70% of its profit.

The London-based company saw volumes in Latin America increase by 6%. In Africa‚ lager volumes grew by 4% on an organic basis.

Volumes in Asia-Pacific‚ excluding Australia‚ declined 1% largely as a result of subdued volumes in China‚ which fell 3%. This compares with 7% growth in the Asia-Pacific region last year.

SABMiller said that there was an improving trend in lager volumes in its Australian business. The brewer bought Foster's Group in 2011 for about $11.1bn. Sales were down 4%‚ compared with an 8% decline in the previous six months. Its flagship brand Victoria Bitter grew by 2%‚ the first quarter of growth in over 10 years.

"The integration programme in Australia remains ahead of schedule in respect of both synergy delivery and capability build‚" SABMiller said.

In the third quarter‚ Europe lager volumes were up only 1% on an organic basis‚ with some beer markets affected by depressed consumer confidence.

Sales to retailers at the company's US joint venture MillerCoors dipped 1.1% in the period‚ while sales to wholesalers were down 1.4%‚ it said.

Rey Wium‚ an analyst at Renaissance Capital‚ said that overall‚ the group's trading update was slightly better than expected.

"Although volume growth of 2% fell short of our estimates‚ mainly due to weakness in low profit market China‚ price increases were quite solid‚ around 5% across the group. The rate of decline in Australia has also slowed‚ which is a positive‚" Wium said.

Wickham said SA surprised "pleasantly" with a 3% quarterly gain compared with a first half run rate of 1%.

Source: I-Net Bridge

For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.

We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.

Go to: http://www.inet.co.za