14th Oct 2014 06:58
LONDON (Alliance News) - South African beer and soft drinks giant SABMiller PLC Tuesday said sales in the second quarter were hit by lower lager volumes and weaker trading in Australia and China, although it said total beverage volumes inched up in the first half as a whole, balanced by stronger growth in soft drinks in Latin America and Africa.
The brewer of brands including Peroni, Pilsner Urquell and Grolsch said total beverage volumes were down 1% in the second quarter, hit by weakness in Australia, softer demand in China, and poor summer peak weather in Europe, following some growth in the first quarter.
Although volume growth was hit by weaker lager volumes, SABMiller said strong growth in soft drinks helped offset this, as total beverage volumes grew by 1% for the first six months on an organic basis, driven by strong performance across both lager and soft drinks in Latin America and Africa.
"Financial performance has been affected by ongoing foreign currency movements as well as weaker second quarter trading conditions in China and Australia," said Chief Executive Alan Clark in a statement.
SABMiller said group net producer revenue grew by 3% and NPR per hectolitre grew by 4% in the second quarter, both on an organic, constant currency basis. For the first-half, NPR grew by 5% and NPR per hectolitre was up 3%.
"We achieved resilient net producer revenue growth in the first half, powered by our Africa and Latin America businesses," said Clark.
Organic growth rates exclude the impact of acquisitions and disposals.
In Latin America, group net producer revenue for the first-half grew by 7%, driven by price increases and favourable brand mix together with total beverage volume growth of 3%, SABMiller said. It said lager volume grew by 1% in the half year, held back by trading restrictions in Colombia in the first quarter, while soft drinks volumes were driven by its non-alcoholic malt brands.
In the Africa region, now including the South Africa beverages business, SABMiller said group net producer revenue grew by 10% in the first half, underpinned by total beverage volume growth of 5%, together with pricing and 'premiumisation' in lager.
However, SABMiller said net producer revenue declined in the Asia Pacific region, hit by ongoing pressure in Australia and poor summer weather in China - net producer revenue declined by 1%, with the total beverage volume down 3%.
In Europe, group net producer revenue grew by 3%, buoyed by total beverage volume growth of 2%, with lager volumes level with the prior half year, it said, while in North America, growth continued to be driven by its premium brands. North America group net producer revenue grew by 2%, driven by MillerCoors' group net producer revenue growth of 2%.
The group is looking to enhance and bolster its beer portfolio. Just last week Chief Executive Alan Clark said at an investor meeting, that he wants to convert wine and spirits drinkers to premium beer instead, developing and extending the range of the brewer's top-end beers and ciders while at the same time making sure it has a stable of affordable beers to sell in emerging markets.
It said it wants to attract more consumers by expanding its portfolio of flavoured beers and ciders, such as Radlers. It said it plans to build a position for beer outside its traditional role as the "favourite drink for men in pubs and bars", by offering various flavoured beer and ciders that will attract "more consumers on more occasions".
In May, the brewing giant reported a higher pretax profit for its financial year ended March 31, as it offset lower revenue by raising prices and expanding its portfolio of higher-margin premium brands.
Last month, Dutch brewer Heineken issued a statement stating that it had received and rejected a takeover approach from SABMiller.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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