UPDATE: SABMiller Meets 3Q Expectations; Lager Volumes Fall

Brewing giant SABMiller PLC (SBMRY) Thursday said its third-quarter financial performance had met its expectations, despite a surprise fall in comparable lager volumes as demand weakened in many of its markets.

The London-based company - which counts Miller Lite, Peroni and Pilsner Urquell among its brands - said that lager volumes grew 1% in the three months to Dec. 31. Organic lager volumes - which strip out the effect of acquisitions - dropped 1%. This compares with a rise of 1% in the previous quarter and is below analysts' expectations.

"Consumer demand has been affected by the current global economic slowdown, and has continued to weaken in many of the group's markets," the company said in a statement.

"The financial performance of the group in the quarter, supported by firm pricing and cost efficiencies, has been in line with our expectations, notwithstanding the relative strength of the U.S. dollar against the group's major currencies."

SABMiller is the world's second-largest brewer by volume, since losing the No. 1 spot to Anheuser-Busch Inbev NV (ABI.BT) of Belgium, following InBev's $52 billion acquisition of Anheuser-Busch last year.

SABMiller said in November it was scaling back investment in the face of continued cost pressures and slowing demand for beer worldwide.

Demand has been hardest hit in the U.S. and also in Europe, where organic lager volume declined 1% "as the region experienced the impacts of the global financial crisis on consumer disposable income."

SABMiller's European operations are focused on Eastern and Central Europe, where growth has been stronger in recent years than in Western Europe. However, organic volumes in Russia dropped 22% in the quarter, as wholesaler destocking has combined with the effects of a sharp economic slowdown.

Since June last year SABMiller has operated in North America through a joint venture with Molson Coors Brewing Co. (TAP) named MillerCoors. In the three months to Dec. 31, MillerCoors' domestic sales to retailers dropped 2.3% against a weaker market. Worst hit was Miller Lite, with sales to retailers down 7.5%.

In the Africa and Asia business, organic volumes rose 2%, with China volumes flat as the economy slowed.

In the company's home South Africa market, lager volumes grew 1% with a strong performance from the mainstream portfolio as consumers traded down from premium products.

SABMiller shares Wednesday closed at 1060 pence, down 21% in the past 12 months despite a recent rally. The company has a market capitalization of GBP15.9 billion.

 
   Company Web site: www.sabmiller.com 
 
   -By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; [e-mail] 
 

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