UK: SABMiller FY net profits fall, beer sales slow
SABMiller has reported a 7% slip in net profits for its fiscal full-year and is to reduce investment to reflect lower consumer demand for beer in the economic downturn.
Net profits slipped to US$1.88bn for the 12 months to the end of March, compared to US$2bn for the previous year, SABMiller said today (14 May).
Higher prices helped the UK-listed brewer to offset stalling beer sales by volume in several key emerging markets.
Net sales rose by 6% to $25.3bn, while like-for-like volume sales for the 12 months were flat against the year before, said SABMiller, which also today announced that it has acquiured all outstanding shares in its Polish subsidiary, Kompania Piwowarska.
Trevor Stirling, analyst with Sanford Bernstein, said that the results were "in-line with our estimates". SABMiller's share price remained broadly flat on the London Stock Exchange this morning, at just over GBP12.2.
SAB reported a tougher second six months, largely due to a "significant weakening" in major operating currencies against US$ and also a steeper slowdown in consumer demand.
EBITDA was flat against the prior year, at $4.1bn, although operating margin declined by 16% on higher input costs.
The firm said: "During the second half of the year, the group has re-evaluated spending in light of the changing consumer environment and is selectively maintaining investment behind its brands and operations to support future growth."
Beer volume sales were flat in Europe, as a tough year in Russia hampered growth in some other markets. Volumes fell 2% in South Africa and also dipped in the US, where the firm operates as a joint venture with Molson Coors.
Volumes in Latin America were up 1% for the year, as Peru and Ecuador offset slowdowns in Colombia and Central America. Africa, excluding South Africa, and India both saw volume growth of 5%, while China reported growth of 4% for the group.
Despite lower demand for beer in many markets around the world, a number of individual SABMiller brands saw growth. Pilsner Urquell volumes increased by 7% for the year, with Peroni Nastro Azzurro up 17%. Peroni rose by nearly 40% in the UK, albeit from a low base.
The brewer was cautious on its fiscal 2009/10. "Global economic conditions and consumer demand weakened during the year and there remains little visibility as to the timing of any recovery.
"In the current year we expect commodity cost pressures to continue, given existing contractual arrangements. In addition, the currency translation effect of the stronger US dollar will impact our reported results," the firm said, adding that it has "curtailed" investment but remains in a "strong financial position".
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