Blog: Back in the saddle
Chris Brook-Carter | 12 May 2008
From our group editor, and former just-drinks editor, Chris Brook-Carter.
Olly is away in Brazil this week, and, with our news editor’s desk temporarily empty, you guys are stuck back with me for the next five days. It’s been a while I know, but I reckon I can get the hang of this drinks industry thing once again without too many slips.
Olly is checking out InBev’s facilities in the country – which as he pointed out in his weekly couldn’t have come at a more interesting time.
InBev, when it reported its results last week, was described by one analyst as having had "a nightmare quarter".
For all the talk of the potential offered by the BRIC markets, the brewer saw volumes in the quarter slip in three of them, the only exception being India. EBITDA margin, meanwhile, fell for what the same analyst suggests is the first time in Inbev's history.
With Brazil being one of those three struggling, Olly certainly has the ammunition to put the local management through its paces.
Meanwhile, a handful of other analyst reports I saw over the weekend gave some hope to the newly formed Dr Pepper Snapple Group, which I gave a bit of a hard time in my column on Friday.
Dr Pepper Snapple made its stock market debut last week, to a very lukewarm reception.
I argued investors were waiting to see how the group would perform in its first few quarters because they were wary of the company’s competitive position vis-à-vis Coke and Pepsi.
However, analysts in Barron's financial magazine seem to suggest that the company is already trading at a discount to its real value.
The report cited several analysts who valued the company’s shares at between US$28 a share and $35 a share.
Shares are currently trading around the $25 mark.
The article said part of the reason for last week's stock drop was likely selling by UK institutions holding Cadbury Schweppes, but which do not want to hold a US-listed drinks group.
If this is the case we may see some correction over coming weeks. For the group’s sake let's hope so; it would be great to see it get off to a good start.
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