Public Thirsty for Sabmiller

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The public’s thirst for beer is so great that only a board of fools and a management of incompetents could drive a beverage manufacturing and distributing company into the ground.  Since Sabmiller (LSE:SAB) listed on the London Exchange in 1999 it has proven that its vision of mergers and acquisitions has been ideal for this market sector.

While beverage distribution may not seem to be the noblest of businesses — like BANKS, for example — it is, nonetheless, one in the greatest demand.  Sophocles spoke well when he said, “If you were to offer a thirsty man all wisdom, you would not please him more than if you gave him a drink.”  (Actually, what he really said was more like “Αν ήταν να προσφέρουν ένα διψασμένο άνθρωπος όλοι σοφία, δεν θα μπορείτε να τον περισσότερο από ό, τι αν του έδωσε ένα ποτό, but the translation gets the idea across.)

The demand for a cold one is consistent worldwide.  Just because the pubs are closed in London, doesn’t mean that Americans have finished their daily demand for brewskis or that the Australians will break into the new day without growing a thirst for a draught throughout the day.  And that doesn’t begin to account for the rest of the world.

On this day, when Sabmiller announced its results for the fiscal first half, the company’s  share price was up 26.50 pence from yesterday’s close, a marginal increase of 0.95%.  However, a marginal increase in the neighborhood of 2827.50 (where Sabmiller is) is a lot different than in the neighborhood of 28.27.  Sabmiller stock has been climbing consistently since the 2008/2009 economic crisis (is that over yet) from a low of 799.50 on 07 October 2008 to yesterday’s close of 2,801.00.  Today’s price is just slightly off the company’s five-year high of 2,868.00, which it attained on 06 August this year.  As at 31 December 2011, Sabmiller was ranked 11th on the FTSE 100 with a market cap of £39,353.37 million.  It’s market cap today is £45,088.73 million.

The company reported an 11% increase in group revenue for the first half, year on year, from $15,688 million USD to $17,476 million USD.  EBITA (not EBITDA) was up 17% from $2,701 million to $3,173 million, whilst pre-tax profit was up 12% from $2,041 million to $2,276 million.  Not unexpectedly, the company’s most significant organic growth was in Africa, with a 19% increase in EBITA.  Latin America and South Africa beverage performance followed with 14% and 11% respectively.

Commenting on the company’s first half results, Executive Chariman Graham Mackay said, “Broad-based revenue and profit growth in the first half reflects the continued success of our approach to the development of our brands, product portfolios, distribution and sales effectiveness.  We have strengthened our local flagship brands, complemented by product innovation across a wide range of styles and prices.  Margins have risen modestly despite higher input costs, as a result of our cost reduction and procurement initiatives supplemented by a positive contribution from the acquisitions and business combinations concluded in the second half of last year.”

Sabmiller also distributes a broad range of soft drinks to slake the thirst of children until they become consumers of “adult beverages” and to retain them as adults even if they become tea-totalers.

So, what do you say we raise a glass and salute Sabmiller for a job well done.  Salute!

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