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SABMiller - which brews well known brands such as Grolsch, Peroni and Pilsner Urquell - is facing headwinds from weakening economic conditions, rising commodity prices and unfavourable exchange rates. Indeed, strip out income from selling the US and Puerto Rico business and adjusted pre-tax profits rose just 5 per cent to $1.86bn in the period.
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In Europe, responsible for 36 per cent of group sales, cash profits fell 6 per cent (on a constant currency basis) to $725m - partly reflecting poorer weather. While in South Africa, cash profits slumped 10 per cent in constant currency terms to $332m, with consumers being hit by higher food and fuel prices. In sharp contrast, though, North American cash profits jumped 18 per cent to $355m, helped by a strong showing from the Miller Brewing Company operation. The Latin American and African & Asian units did well, too - cash profits rose 8 per cent, to $474m, and 12 per cent, to $311m, respectively.
Charles Stanley is maintaining its full-year pre-tax profit estimate of £3.4bn, EPS of 140¢, but is likely to to downgrade the following year's EPS estimate to around 142¢.
| SABMILLER (SAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 900p | MARKET VALUE: | £13,565m | |
| TOUCH: | 899-900p | 12-MONTH HIGH: | 1,463p | LOW: 758p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 1,117¢* | NET DEBT: | 54% | |
| Half-year to 30 Sep |
Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2007 | 10.8 | 1.58 | 63.9 | 16.0 |
| 2008 | 11.2 | 2.02 | 94.8 | 16.0 |
| % change | +4 | +28 | +48 | |
Ex-div: 26 Nov Payment: 5 Dec *Includes intangible assets $14.2bn, or 944¢ a share £1=$1.52 |
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SABMiller's shares have fallen on our sell tip (1,106p, 27 June 2008), but still trade on a not so cheap 10 times full-year forecast earnings. So, with cost pressures set to continue and a stronger dollar likely to dampen future earnings, they remain high enough.
Last IC view: Sell, 929p, 21 Oct 2008
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-IC-2.1.3g-prod - 17/03/2010 18:13:09 - ben.wheeler
