Analysis - SABMiller outpaces rivals in FY but headwinds persist
SABMiller faces pressure in the US
SABMiller has delivered a strong set of full-year results but problems loom, such as pressure on Miller Lite in the US loom, an analyst has warned.
The UK-based brewer and soft drinks maker “compared very favourably” to rivals in yesterday's FY numbers, Bernstein analyst Trevor Stirling said in a note today (24 May). However, a high-single-digit decline for Miller Lite in North America was just one headwind for the year ahead, the analysts added.
Higher innovation costs as SABMiller focusses on price/mix instead of volumes will cut into margins while Latin America is unlikely to rebound to “normal” levels after a slowdown this year, Stirling said.
SABMiller's exposure to high-growth emerging markets will also continue to lessen as its Foster's acquisition beds in, the analyst said.
“The 'growth-gap' compared to its peers has fallen post-Foster's, with now about 35% of underlying EBIT from mature markets and regions (Europe, US and Australia),” it said.
“Fourth-quarter volumes were +3%, with strong progress in rebuilding of customer relationships and relaunching the VB brand,” Nomura said. “The company remains focussed on rebuilding the beer category in Australia to create value.”
In September, SABMiller revamped the formula for its Victoria Bitter brand in Australia, after the beer lost its market leadership status.
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