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Strong consumer demand for SABMiller's beers in Africa and China has outweighed analysts' disappointment over sales in the Americas.

Analysts group Evolution Securities has today (19 October) raised its full-year earnings guidance on SABMiller by 3%. Its reassessment of the brewer's fortunes follows the firm's highest pace of quarterly volume growth in nearly three years.
Faster sales growth and fightbacks across much of Europe and Asia in the second quarter of the SABMiller's half-year, together with ongoing strong increases in several African countries, have renewed the brewer's momentum. 

Lager sales by volume for the six months to the end of September rose by just 1%, but this still reflects improvement from a 1% dip in volumes in the same period of last year. Group volumes were flat globally in the year to the end of March.

That said, analysts noted that the picture across SABMiller's markets remained "mixed" in the most recent half-year. Romania, in particular, continued to be a thorn in the brewer's side in Europe. However, it was the Americas that generated most concern.

Volumes slipped "marginally" in Latin America, underlying the importance of Colombia to SABMiller's operations there. A 14% rise in value added tax on alcohol in Colombia at the start of 2010 was the main reason for SABMiller's Bavaria subsidiary reporting a 7% drop in volumes for the six months.

"The most worrying division for us was Latin America," said Evolution's Simon Hales in a note. "H1 volumes were down low-single-digit having been +1% in Q1," he said, pointing to tax and weather problems in Colombia, as well as a Sunday trading ban in Ecuador.

Sanford Bernstein said that Latin America was a particular concern because it contributes to around 30% of SABMiller's annual EBITDA. Asia's strong performance, meanwhile, will have a more limited affect on earnings because the region only contributes to 2% of EBITDA.  

North America provided the secondary cause for concern. Beer sales to retailers at SABMiller's majority-controlled joint venture with Molson Coors, MillerCoors, fell by 4% in the second quarter - compared to 2.5% in the first. This apparent deterioration in the second three months contradicts industry figures that have pointed to signs of a recovery on the mainstream US beer market.

SABMiller said yesterday that it remained confident on its full-year prospects. Results, it said, were in-line with its expectations. The brewer will report full half-year results on 18 November.


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