Comment - Quick Take: Latin America Carrying SABMiller

It's quite clear that emerging markets are bolstering SABMiller, but Latin America stands at the top of the pile.

Strong profits momentum, backed by strong consumer demand for beer, in markets across the developing world gave SABMiller reason for cheer on its fiscal first-half. Within that, though, it is Latin America that appears to be the main engine for growth.

SABMiller's earnings before interest, tax and amortisation rose by 16% in Latin America on an organic basis for the six months to the end of September. The region may have lagged growth of 23% and 29% on the same basis in Africa and Asia respectively, but its contribution to the brewer's health is, currently, far more important.

For SABMiller's current fiscal year, Sanford Bernstein estimates that Latin America will contribute to 32% of the Peroni brewer's EBITA and 23% of its net sales. That makes it the most important of the group's six geographic business divisions.

By contrast, Africa and Asia combined will not equal the amount of EBITA coming from Latin America, if Bernstein's forecast proves to be correct. 

On a conference call with journalists today (17 November), SABMiller's CEO, Graham Mackay, said that, within Latin America, Colombia specifically has shown strong profits momentum so far this fiscal. 

Speaking to just-drinks, he appeared less confident about the group's ability to convert sales into profits in Africa and Asia. While the group is clearly performing well in both of those regions, Mackay said that, in Africa, "we do have a fragmented production base in Africa and that is not getting any less fragmented".

In Asia, meanwhile, SABMiller's joint-venture partner in China, China Resources Enterprise, warned today of a slowdown in consumer confidence in the country. Could it be that China is catching a western economic cold? Mackay said that the environment in China is "quite constrained". He added: "The mood music is more sombre than usual," although the brewer's joint-venture there, CR Snow, continues to grow. 

Latin America, then, is standing tallest as the brewer seeks to offset ongoing tough times in Europe and North America.