Cheer as AB Inbev recovers
Globally the group’s second quarter results were better than expected, and it recorded a 10.8% growth in volume in SA
The ignominy of it all. SA Breweries (SAB) was once a colossus that strode across the global beer market, inspiring fear and respect (well, sometimes) wherever it went.
Now, 20 years after it first stuck its toe into the world market, SAB has been tucked into that catchall category used by multinationals for territories they haven’t yet quite made up their minds about: Europe, the Middle East and
Africa. At least SAB had the benefit of AB Inbev’s Us$104bn payout to shareholders last year — cash that does compensate for lots of ignominy.
For SA shareholders who agreed last year to swap their shareholding in Sabmiller for those in AB Inbev, this week’s results for the three months to June (its second quarter) were the first ray of sunlight to emerge since the takeover.
Since AB Inbev listed on the JSE in October at R1,845/share, the stock has tumbled 13.3%.
But with last week’s results — earnings up 12% to $5.35bn as it took a hatchet to $335m in costs — the share price soared 6.8% on the JSE. Sentiment, it seems, has shifted.
This is why a number of analysts, including Standard Bank Securities, Societe Generale and HSBC, raised their target share price for the company. It says much that of the 36 analysts who cover AB Inbev, 24 rate it a buy, 11 a hold and just one a sell.
For those worried that SA might become a distinctly forgettable second fiddle in the wider AB Inbev, the good news is that the country did make it to the top of the highlights list in the results. This is because the SA business reported stellar 10.8% volume growth — the strongest growth on record at SAB, as far as anyone at AB
AB Inbev
Inbev can tell.
“It is the highest beer volume growth by some measure in SA for a decade and more,” says Marcel Regis, business unit president: SA.
What is intriguing is that this has happened now that the former Sabmiller has been placed under the control of the notoriously tight-fisted Brazilian team that controls AB Inbev.
Other factors are involved, of course: the timing of Easter helped, as did unseasonally warm weather and the introduction of powerful AB Inbev brands in local markets, such as Stella Artois and Corona.
But the boost from AB Inbev brands seemed to be a pattern across much of the old Sabmiller territory.
CEO Carlos Brito told analysts that the intro-