SABMiller keeps turning despite economic slowdown

SABMiller plc last week issued a trading update for the 12 months to 31st March 2009, which showed how it has been affected by the economic downturn but also the ongoing resilience of its underlying business. Its lager volumes for the full year were 2% ahead of the prior year but were level on an organic basis, with a 1% decline in the fourth quarter. Soft drinks volumes for the full year grew organically by 5%.

Throughout the world regions, SABMiller experienced a common pattern of problems in some localities being of-set by gains in others. In its original home turf of South Africa, SABMiller suffered a fall in full year lager volumes of 2%, compared to the prior year. However, soft drinks grew by 4%.

In Africa, there were local problems, such as a 30% social levy tax on alcohol in Botswana, but this was balanced out with a reduction in excise duty in Zambia. In Africa and Asia traditional beers were up 25% although the organic growth of lager volumes was a more modest 4%.

Eastern Europe produced some striking variations with Romania enjoying full year volume growth of 18%, whereas in Russia, full year organic volumes were down 7% “reflecting the de-stocking of wholesaler inventories in the second and third quarters”.

In the USA, SABMiller operates as MillerCoors, but the results showed the same kind of complexity as in the rest of the world. Domestic sales to retailers were down 0.4% for the nine months to 31st March 2009, against the prior year on a pro-forma basis. However, the company also enjoyed the benefits of net pricing growth and synergies from integration. Miller Genuine Draft and other brands also performed robustly.

In Latin America, Peru saw a 9% increase in volumes compared to the prior year, which compensated for full year volumes going down 6% in Columbia. Overall in Latin America, lager volumes were up 1% and soft drinks were up 2% on an organic basis.

A common thread reported by SABMiller for the year period is the negative impact of a weaker fourth quarter across the different regions. However, China bucked this trend with double digit growth in the fourth quarter, and India also enjoyed a strong fourth quarter, helping it to achieve a 5% growth in volumes, across the year. But this was topped by Australia where growth in excess of 60% led by strong performances of Peroni Nastro Azzurro and Miller Chill.

Despite the unfavorable currency movements in the second half of the year, SABMiller concludes that the financial results are in line with its expectations. Its brands include Miller Lite, Peroni and Grolsch, amongst others.

20 April 2009