SABMiller shows brewing mettle in world markets
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Volumes grow 3%; global market share firms
KwaZulu-Natal Correspondent
DURBAN SABMiller has shown its mettle by growing beer volumes 3% in the past year and simultaneously dealing a blow to sceptics claiming the world's third-largest brewery cannot cut it in mature markets.
Brewing more than 115-million hectolitres of beer in the 12 months to March last year, SABMiller has a brewing presence in more than 40 countries across four continents and a portfolio of strong brands and leading market shares in many of its host countries.
SA Breweries entered the major league in July 2002 when it acquired the ailing US-based Miller. Internationally, investors had signalled a desire for SA Breweries to prove itself in first-world markets and secure hard currency earnings. Outside the US, SABMiller is one of the world's largest Coca-Cola bottlers and generated a pre-tax profit of $770m on sales of $9,1bn last year.
Releasing its trading update for the 11 months to February, SABMiller signalled yesterday a further firming of its dominance in SA while securing toeholds in Central America and Europe.
Criticism of an inability to tackle first world markets was addressed through stemming the US volume decline, although it cemented by a single brand.
SABMiller CEO Graham Mackay said Miller sales to retailers were 2,7% down on the 2002 pro forma figures against the 3,4% decline in the nine months to December. The continued growth in the Miller Lite brands offset weaker performances.
Distributor inventories remained unchanged following a decline during 2002.
"The execution of the Miller turnaround strategy remains on schedule," Mackay said.
Analysts welcomed the sound performance yesterday, though the Miller recovery was anchored by Miller Lite, holding 40% of the stable, but warned the group was "not yet out of the woods" and there may yet be "some disappointments" before a full recovery.
However, the figures gave credence to management claims for a three-year turnaround time demanded for Miller.
Elsewhere, Central American beer volumes grew 4% and carbonated soft drinks fell 4,5% which Mackay said reflected "a slowing of the negative trend". European volumes were up 8% and financial performance was on target.
The integration projects within Italy's Peroni remained on plan, although integration costs and brand investment, particularly in support of the Miller Genuine Draft launch, affected profitability.
In Africa and Asia, beer volumes rose 3% and Mackay said the division was producing "a strong operating performance" favourably enhanced by currency movements.
Beer SA volumes nudged 3%, while subsidiary Amalgamated Beverage Industries (ABI) achieved a 7% growth in carbonated soft drink volumes.
ABI yesterday signalled headline earnings in the year to March would be up to 30% higher than last year, which MD Mark Bowman attributed to improved volumes, particularly over the festive season.
Mackay said earnings in both units reflected "good underlying operating performances".
The Bottom Line: Page 12
Mar 24 2004 07:04:39:000AM Nicola Jenvey Business Day 1st Edition
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