21st Nov 2013 13:50
LONDON (Alliance News) - The story coming out of SABMiller has remained unchanged for several quarters now, with the brewing giant again reporting Thursday that it's managing to more than offset falling demand in Europe and North America with increased sales in the likes of Africa and Latin America.
SABMiller, brewer of brands like Peroni, Grolsch and Pilsner Urquell, reported a 7% increase in pretax profit in its fiscal first half to USD2.43 billion, from USD2.26 billion, mainly thanks to a USD47 million gain on the disposal of the milk and juice business in Panama and lower restructuring costs, but lager volumes grew 1% organically, driven by growth in Africa.
Lager volumes rose 9% in Africa, 1% in Latin America, and 4% in Asia Pacific, more than offsetting a 4% decline in Europe and a 4% decline at MillerCoors in North America.
Total revenues were a touch higher at USD17.56 billion compared with USD17.48 billion, lifted by increased prices and higher sales of premium beers, while earnings before interest, tax, depreciation and amortization rose to USD3.27 billion, from USD3.15 billion, even though dollar strength weighed on the figure. Its Ebitda margin improved to 23.7%.
"We have improved the reach of our mainstream brands across most regions, and through initiatives such as the launch of Redd's Apple Ale in the USA, the momentum behind Castle Lite across Africa, and the increasing appeal of Peroni Nastro Azzurro from Europe to Australia, we are strengthening our premium propositions across the group and evolving our high-end brand portfolios to appeal to an ever wider range of consumers and drinking occasions," Chief Executive Alan Clark said in a statement.
All the world's biggest brewers are reporting similar trends, with demand falling in North America and Europe due to the economic situation and changing consumer tastes, while demand in emerging markets like Africa is growing strongly.
SABMiller, like big rival AB Inbev, the brewer of Stella Artois, Budweiser and Becks, is trying to offset some of the decline in Europe and the US by "premiumisation" - bringing out premium variations of current brands, launching new ales and drinks, and launching new packaging, marketing and presentation of the brands.
Interestingly, the one developed market doing well is the UK, thanks to premiumisation. Lager volumes were up 5% in the half thanks to a 17% jump in sales of one of SABMiller's Czech beers, Pilsner Urquell, partly driven by its trial of unpasteurised tank beer.
The company launched a trial of unpasteurised Pilsner Urquell during the summer at The White Horse in Parson's Green, the pub it launches all its UK trials. The beer is delivered from the Pilsner Urquell brewery in the Czech Republic within 24 hours and pumped into special copper tanks which are refilled every week. It's how the Czech's drink the beer. It is going to roll out the sale of unpasteurised Pilsner Urquell to more key sites in London over the second half.
In its global outlook, SABMIller said it expects trading conditions to remain unchanged, with growth continuing to be driven by its developing markets, while the strength of the dollar will hit its full-year results and raw material costs are expected to rise in low to mid single digits in constant currency terms.
"Development of our brand and pack portfolios will continue, as we seek opportunities to reach new consumers and enhance the beer category. Price increases will be taken selectively and focus will remain on premiumisation," it said.
SABMiller shares were up 0.3% at 3,244 pence Thursday afternoon.
By Steve McGrath and Alice Attwood; [email protected]; @stevemcgrath1
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