SABMiller draws strength from its global reach

SABMiller reported a tale of mixed fortunes for its results for the 6 months to 30th September 2009. The global drinks giant stressed the underlying strength of its business, with its adjusted earnings growing 10%, despite lager volumes decreasing 1%.

Asia was a particularly strong area, EBITA was up 24%, with Chinese venture CRSnow achieving a 15% boost in lager volumes, although ‘regulatory issues’ caused a volume decline in India. In Latin America EBITA grew 19%, as a result of strong pricing and cost reduction. This was despite lager volumes falling by 1%, in the context of political and social unrest. In North America, EBITA growth was 7% helped by a 22% increase in Millers Coors pro forma EBITA.

SABMiller’s fortunes were mixed in Africa, where Uganda, Zambia and Mozambique reported good growth. ‘Soft economic’ conditions impacted on profits on Tanzania, and a 30% alcohol tax levy dampened the company’s returns in Botswana. Soft Drinks volumes grew 5% on an organic basis and the company has bought a non-alcoholic beverage business in Zambia.

Europe again proved troublesome in the climate of depressed consumer spending. Both volumes and markets shares fell in Russia, although SABMiller gained ground in Poland, Romania and the UK. The company has purchased a 28.1% minority interest in its Polish subsidiary Kompania Piwowarska.

SABMiller is embarking on a four year project to reduce costs and simplify processes, involving both global and regional systems where appropriate. It expects cost and efficiency savings to rise to approximately US$300 million per annum by 2014.

Looking ahead, SABMiller says that it expects unemployment and weaker consumer spending to continue to act as drag factors. However, it looks forward to favourable currency movements giving increased buoyancy to its business and it also points to its strong financial position as being a crucial springboard from which to take advantage of any future improvements in general market conditions. SABMiller's brands include Peroni, Grolsch and Miller Lite, amongst others.

25 November 2009