SABMiller: Optimism Brewing for the Future

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SABMiller (LSE:SAB), one of the largest brewing companies in the world, today said they were able to record excellent volume growth in line with expectations, despite having declines in sales in certain regions for the third quarter ended 31 December 2011.

Improving growth

In Latin America, lager volumes indicated a strong growth, with volumes increasing by 8%. Notably, Columbia recorded a 6% increase and Peru a 9% increase reflecting the strength of its brands and sales execution on a backdrop of rising consumer expenditure.

Lager volumes in Africa rose by a storming 11% compared to the previous period. Tanzania was a notable performer, with an increase of 13% propelled by both the strong growth in premium brands and extensive marketing activities. Uganda and Zambia were up by 17% and 16% respectively.

Falling Behind

It was not all good news as Europe and North America both suffered a decline in sales.

Despite Ukraine developing a taste for the amber nectar, as their consumption grew by 20%, the overall consumption of lager across Europe had fallen by 2% over the third quarter.  The areas most apparent in signifying the trend was in Poland and in Romania, both falling 6% over the period.

“Beer markets remain affected by intense competition, which continued negatively to impact mix, as well as fragile economic conditions,” SABMiller said.

In the United States, the brewing company is referred to as MillerCoors. The company’s sales to retailers decreased by 3.3% over the quarter while domestic sales to wholesalers decreased by 1.6%.  The report fails to give reasons for this weak performance.

Reasons for Optimism

In the interim (unaudited) management statement, the brewer said total beverage volume were 3% ahead of the prior year on an organic basis. And, lager volumes increased by 3% and soft drinks by 6%. This improved performance made the company’s revenues to rise by a soaring 10%, 6% on an organic, constant currency basis with revenue per hectolitre rising by 3% on the same basis.

This comes after the recent approval by an Australian court to authorise the takeover of Foster’s for an estimated £6.5 billion.  Without the Asia Pacific region incorporating the purchase of Foster’s into their figures, lager volumes were 7% ahead of the previous year. Notably, the Chinese increased their consumption by 5% while the Indians by 21%.

Company Spotlight

SABMiller is one of the world’s leading beer manufacturing companies having operations and distribution agreements across six continents.

Since the trading update was released SABMiller shares have increased by 0.50% as at 12.46 P.M as of the day released of this article.

References
 Business Live
 Schill Malz Analysis
 Foster’s takeover approved
 Company overview

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