Emerging markets boost SABMiller

A mixed fourth-quarter trading statement from SABMiller, the world’s second largest brewer, has highlighted the divide between economic recovery in emerging markets such as Asia and Latin America compared with developed markets such as the US and Europe.

The recovery seen in emerging markets helped the company, which owns Grolsch, Miller Lite and Peroni, to beat forecasts as it reported a 2% rise in fourth-quarter underlying beer volumes, with the quarterly rise to the end of March aided by an early Easter and weak comparative figures from last year.

SABMiller, which expects profits for the full-year to meet forecasts of $3.32 billion, said: “Some of the emerging markets in which we operate started to show signs of recovery towards the end of the financial year.”

Beer volumes in Latin America rose 3% in the year and 8% in the final quarter, with Columbia – one of the company’s biggest markets – witnessing a 13% rise in the final quarter.

Sales in South Africa rose 8% in the last quarter, but were down 1% on the year. The brewer is anticipating a successful summer in the region, however, expecting to sell an extra 150,000 hectolitres of beer during the FIFA World Cup, which kicks off in South Africa in June.

Asia’s recovery was arguably even more encouraging for the company, with beer volumes rising 10% over the year.

It was a different story in developed markets, with sales in the US, where SAB runs a joint venture with Molson Coors, slipping 4% in the quarter and 2.3% on the year. Sales in Europe fell 5% on the year.

The company said the European decline was symptomatic of “the continued weak economic environment, as well as substantial increases in excise taxes in a number of our markets”.

The brewer has reason to be optimistic about its opportunities in the UK, however, with sales of Italian lager brand Peroni climbing more than 30% by volume, which the company put down to very strong supermarket sales.

Elsewhere, Dutch brewer Heineken said today that its underlying profit rose in the first quarter, helped by one-off gains and lower financing costs, even as lower beer sales across Europe, the US and Russia weighed on its top line.

Heineken, which has not yet delivered a detailed profit breakdown, said earnings before interest and taxes were "significantly higher" due to a €142m injection from the sale of two Asian units.

Excluding those one-off gains, earnings rose in the mid-single digits, helped by cost savings. Net profit in the quarter was €218m, the company said, without giving a year-on-year comparison.

Revenue for the quarter fell 3.5% to €2.94bn as the total beer volumes dropped 8% to 23.57m hectolitres.

Alan Lodge, 21.04.2010