Weak demand hurts SABMiller
Economic volatility in certain African markets hurt beer and soft drinks group SABMiller’s sales in the first quarter.
|||Johannesburg - Economic volatility in certain African markets hurt beer and soft drinks group SABMiller’s sales in the first quarter to June 30.
SABMiller said in a trading statement yesterday that net producer revenue, which is group revenue less excise duties and similar taxes, as well as the group’s share of associates and joint ventures, declined by 4 percent, compared with the same period last year. SABMiller attributed the decline to the translational depreciation of its key operating currencies against the US dollar.
The company said weak consumer demand had affected volumes in African markets, even though net producer revenue was up 6 percent, compared with the corresponding period last year. It said larger volumes in Africa declined by 1 percent, while volumes of other alcoholic beverages also declined by 11 percent, compared with last year.
SABMiller, which has a primary listing on the London Stock Exchange and a secondary listing on the JSE, is currently being bought by beer multinational, Anheuser-Busch (AB) InBev.
On Wednesday, the US Department of Justice approved the $107 billion (R1.5 trillion) merger after AB InBev agreed to divest SABMiller’s US interest in America’s second-largest beer company, MillerCoors - a joint venture between SABMiller and Molson Coors Brewing Company - to Molson Coors.
Opportunities
Christopher Gilmour, an investment analyst at Barclays Wealth & Investment Management, said yesterday that Africa still offered enormous growth opportunities for SABMiller. “(Africa is) still very attractive, but far less so than even a year ago, due entirely to much lower commodity prices,” Gilmour said.
In the trading statement, SABMiller said its net producer revenue in South Africa increased by 6 percent. It said South African beer volumes declined by 3 percent, while soft drinks volumes increased by 6 percent.
“This was another quarter of good underlying momentum for our subsidiaries, with continued delivery of our strategic priorities. In particular Europe, South Africa, Colombia, Peru and Australia delivered good growth, chief executive Alan Clark said.
“Our performance was tempered by a more challenging quarter in some markets in the rest of Africa, where volume was negatively impacted by economic volatility and challenging trading conditions. We also continued to face trading headwinds in our associates and joint ventures key markets, such as China, Angola and the USA.”
The group’s net producer revenue in Europe increased by 6 percent, while beverage volumes were up 8 percent, compared with 2015. In the UK, net producer revenue grew by 13 percent.
“Beverage volumes were up 15 percent, driven by the success of our brand portfolio initiatives. Peroni Nastro Azzurro volumes grew by 8 percent, supported by an increased rate of sale in the on-premise channel and successful pack innovations in the off-premise channel,” the company said.
SABMiller shares rose 0.17 percent on the JSE yesterday to close at R830.86 to value the company at R115.35 billion.
BUSINESS REPORT