UK: UBS cuts SABMiller share coverage

By just-drinks.com editorial team | 18 May 2007

SABMiller has had its share rating lowered.

UBS said today (18 May) that it was downgrading its coverage of the brewer to 'reduce' from 'neutral'. The broker noted that SABMiller's reported EPS for its full-year 2007 came in 1% below estimates, as its US Miller unit pulled down impressive performances in SABMiller's other markets.

UBS also cut its EPS estimates for SABMiller this year and in 2009 by 3% and 2% respectively.

While the strong South African Rand and Colombian Peso have benefited 2008 EPS estimates by 2.7%, UBS warned that this would be offset by higher interest costs, capital expenditure and central costs. The broker maintained a target price of GBP11.30.

Earlier this week, SABMiller posted a 14% rise in pre-tax profit for the year to the end of March, hitting US$2.8bn. Total sales were up by 22%, reaching $18.6bn. EBITA in North America was 17% down year-on-year at $376m as higher commodity costs, declining Miller Lite volume and price competition in the economy segment hit the bottom line.

Sectors: Beer & cider

Companies: SABMiller