Grolsch brewer SABMiller beats forecasts

By This Is Money
Updated: 10:08 EDT, 19 April 2011

SABMiller sold more beer than forecast in the first three months of 2011, with emerging markets in Africa and Asia leading growth.

Booze run: Emerging markets in Asia and Africa leading growth

The world's second-largest brewer beat expectations by 3% in the three month period, with all its regions except the United States seeing growth.

The maker of Miller Lite, Peroni and Grolsch said beer volumes for its full year through to March were up 2%, while price rises pushed its annual revenue 5% higher.

Like its rivals it is facing higher costs for commodities such as barley, wheat and corn, and saw raw material costs increase moderately in its second half, although they were marginally lower for the full year.

The London-based brewer's shares, which have bounced from a 2011 low of 1,998p set a month ago, rose 1.3% to 2,220p today in a slightly firmer London stock market - not far from their all-time high of 2,328p set at the end of 2010.

'We see these as a strong set of numbers for SAB that, along with reassurance on costs, should be good for the shares this morning,' said analyst Martin Deboo at Investec Securities.

Many brewers buy their barley, corn and wheat supplies well in advance, so the uptick in input cost currently reflects the grain price rises from last summer. Dry weather in the main production areas is currently pushing up prices.

The brewer, which earns over 80% of its profits in emerging markets, has been helped by its low exposure to flat Western beer markets. It said trading had been in line with management expectations for the full year.

SABMiller and the world's biggest brewer Anheuser-Busch InBev have benefited from growth in emerging countries, while others such as Heineken and Carlsberg are held back by their bigger exposure to flat European markets. Beer volumes were led by its Africa and Asia regions, while Latin America and Europe returned to growth in its fourth quarter through March and the United States saw a volume fall. The brewer said all markets other than North America had seen increased beer volumes in its second half.

Investors were looking for a 1.7% rise in underlying fourth-quarter volumes, based on a Reuters poll of eight banks and brokerages, coming after a 3% third-quarter rise. Second-quarter volumes turned positive with a 3% rise after a 1% first-quarter fall.

The group, which also brews Castle, Snow and Aquila beers, said fourth-quarter underlying volumes rose 17% in Africa including Zimbabwe, 8% in Asia, 1% in Latin America and 2% in Europe. Volumes were level in South Africa. In the United States, where it formed the MillerCoors joint venture in July 2008, quarterly sales to retailers fell 1.4% in a market which remains challenging.

SABMiller added that its soft drinks volumes for the quarter and full year grew some 3% on an underlying basis.

Other big brewers report first-quarter results over the next weeks - Heineken on April 20, AB InBev on May 4 and Carlsberg on May 11. SABMiller's full-year results are due on May 19.