SABMiller’s full year results leave it poised for any future upturn

SABMiller last week announced a ‘strong performance in challenging conditions’ for the full year to 31st March 2010. The global brewing giant announced that its group revenue was up 4%, with EBITA up 6%.

Latin America was a particularly strong area for the company, with EBITA growing 17%, due to a winning mixture of volume growth; pricing and mix benefits combined with lower raw material costs. 3% lager volume growth was achieved in Columbia despite higher beer taxes. North America served up 7% for SABMiller. The MillersCoors joint venture brought synergy benefits, which counteracted a ‘sluggish beer market’. In contrast, Europe was again a difficult area for business with economic conditions and excise increases in key markets leading to a 5% decline.

The brewer has expanded its presence in Africa by taking on a number of additional projects and business streams, including the acquisition of a water business in Ethiopia and of a Maheu business - a non-alcoholic maize drink - in Zambia. Overall lager volumes in the continent grew 6%. This contrasted with spectacular 32% lager volume growth in Australia. Meanwhile, 10% lager volume growth in China helped to dilute a 14% fall in India. Back in the company’s home territory of South Africa, higher input costs and, and intensified marketing spend caused some drag, with lager volumes ending 1% below the prior year. SABMiller is enacting the black empowerment transaction with 8.45% of South African Breweries Ltd being placed under black ownership.

Overall in terms of its outlook, SABMiller expects that a recovery in consumer spending won’t take place until the second half of the current financial year. The company is embarking upon a project to reduce costs with a simplification and standardisation of its business operations. It believes that its financial position means that it is poised to take advantage of any improvement in trading conditions.

28 May 2010