21st Jan 2015 09:20
LONDON (Alliance News) - Brewing giant SABMiller Wednesday reported a 1% drop in lager volume in the third quarter of its financial year, hit by continued weakness in China and lower US shipments, but its soft drink volumes continued to expand, rising 4%.
In a trading update, SABMiller, the brewer of brands including Peroni and Grolsch, said its net producer revenue for the three months to end-December grew 4% at constant currency rates. The figure declined by 5% at actual rates as it was hit by adverse currency movements.
Net producer revenue per hectolitre grew in all regions, as it continued to sell a greater proportion of its premium lagers and drinks.
"We continued to drive steady net producer revenue growth, notwithstanding varied local market performances, as we benefited from the breadth of our global portfolio of businesses. During the quarter, our Latin America and Africa businesses continued to grow both volumes and revenues, together with Europe, while more difficult trading conditions, particularly in China, held back the overall group performance," Chief Executive Alan Clark said in a statement.
During the quarter, Latin America volumes increased 2% and African volumes by 4%, with both businesses growing revenue. Europen volume growth was 2%, while North American volumes were down 3%.
Net producer revenue in China fell 7% as volumes declined by 9%, although net producer revenue per hectolitre rose as it sold a greater proportion of its premium lagers.
SABMiller shares were up 2.3% at 3,421.00 pence Wednesday morning, one of the best performing stocks on the FTSE 100, as the brewing giant's overall trading figures came in broadly in line with what analysts were expecting.
"This is broadly in line with trends reported in first-half but we believe that continued weakness in lager volumes is a touch disappointing. There is no substantive statement on the outlook (may be no surprise given that trends are unchanged) which the market may treat with caution," said Wyn Ellis, an analyst at Numis.
"Weak underlying trading in China and North America in the wake of SABMiller's rebuffed approach for Heineken in the Autumn means that SABMiller remains a potential AB InBev acquisition target, in our view. We are maintaining our financial year 2015 forecasts but some recovery in volumes is needed if our financial year 2016 forecasts are to be achieved," Ellis added.
Numis is forecasting a pretax profit of USD5.36 billion for the current financial year and USD5.84 billion for next year.
At the end of last year, SABMiller announced that it had agreed with The Coca-Cola Co and the majority shareholder in bottler Coca-Cola Sabco to combine the bottling operations of their non-alcoholic ready-to-drink beverages businesses in Southern and East Africa, creating a company that accounts for about 40% of all Coca-Cola beverage volumes in Africa.
The new bottling company, called Coca-Cola Beverages Africa, will have operations in 12 markets across southern and east Africa, have pro-forma annual revenue of USD2.9 billion, and bottle 729 million unit cases a year. It will be the largest bottler in Africa and the 10th largest in the world. SABMiller will own 57.0% of the new company.
By Steve McGrath and Rowena Harris-Doughty; [email protected]; @stevemcgrath1; [email protected]; @rharrisdoughty
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