Underlying dollar earnings at beverage giant SABMiller climbed a better-than-expected 6 per cent, thanks mainly to price increases and action on costs. That was despite lager volumes falling 1 per cent, with strength in Asia and Africa offset by large organic declines in Europe and the Americas.
Even the UK's famously prodigious appetite for lager wasn't enough to stave off a slump in the European business. Despite a recession defying 15 per cent like-for-like rise in UK lager volumes, overall European volumes fell 6 per cent, with consumers cutting back beer consumption, as economic conditions worsened in some of the group's key Eastern European markets. And weakness in markets such as Poland, Romania and Russia was exacerbated by a major devaluation of currencies that meant reported group revenues in the region slumped by 20 per cent, although on a constant currency basis revenue per hectolite grew 6 per cent.
The situation in Latin America was more of stagnation than slump, even though the region was beset with political unrest throughout the six-month period. Volumes there slipped by a percentage point, but in weak markets at least that translated into market share gains in Colombia and Peru, where SABMiller picked up an additional 3.3 per cent and 4.2 per cent of the respective markets. Profit margins were improved, too, up 400 basis points to 20.6 per cent, as stronger pricing combined with lower marketing spend to offset higher commodity costs, driving operating profits up 19 per cent. North America managed 7 per cent operating profit growth, too, even though lager volumes fell 5 per cent, helped by cost savings from MillerCoors.
The big volume story, though, was China, where the popular CR Snow brand saw volume's grow 15 per cent, more than twice the rate of the overall Chinese beer market. Growth in Africa was more moderate, although soft drink acquisitions in Ethiopia and Zambia boosted overall volume by 8 per cent.
Management said trading conditions would remain similar in the second half, but expects a boost from a reversal of the unfavourable currency movements that hit figures in the half. Broker Evolution Securities expects full-year adjusted pre-tax profits of $3.67bn and EPS of 168¢ (137¢ in 2009).
Reported profits in the first half were depressed by $211m of restructuring charges, while in the first half of 2008, a $404m exceptional profit, reflecting gains on disposals, boosted the figures.
SABMILLER (SAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,720p | MARKET VALUE: | £27.1bn | |
| TOUCH: | 1,719-1,720p | 12-MONTH HIGH: | 1,745p | LOW: 906p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 1,221¢* | NET DEBT: | 47% | |
| Half-year to 30 Sep | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 11.2 | 2.02 | 94.8 | 16.0 |
| 2009 | 8.9 | 1.50 | 63.0 | 17.0 |
| % change | -21 | -26 | -34 | +6 |
Ex-div: 2 Dec Payment: 11 Dec *Includes intangible assets of $16bn, or 1,016¢ a share | ||||
