Results steady as SABMiller slips into holding pattern
THE release of SABMiller’s results for the six months to end-September may have provided comfort to AB InBev that its plans for global dominance of the beer market are on track, but they had little impact on SABMiller’s share price. It did tick up during the week, but this was after the world’s largest and secondlargest beer companies announced the terms of their much-anticipated merger.
For the remainder of its life as a stand-alone listed entity, SABMiller’s results will be a matter of little importance to its shareholders except to the extent they determine the level of dividend payments.
AB InBev has indicated that it expects the deal to be completed within 12 months. Given its size and the number of regulatory authorities across the globe required to give their stamp of approval, this seems optimistic.
Motivating employees during this period of suspended animation, which for some will be followed by retrenchment, could be a challenge for SABMiller. During a conference call, intended to discuss the results but almost entirely focused on the proposed merger, SABMiller CEO Alan Clark said the current circumstances could prompt a period of contemplation by employees, but, more compelling an influence on employee behaviour, he believed, was the SABMiller drive to meet ongoing operational targets.
“Employees get caught up in this process,” said Clark, adding that he was spending a lot of time at “town hall meetings” with employees.
The results for the six months to end-September were in line with expectations, with strong performances from Latin America and Africa compensating for weaker contributions from Europe and North America. Africa reported the strongest “organic, constant currency growth” with a 9% increase, emphasising the importance of this region to the merged entity. Latin America came a close second with an 8% increase in “organic, constant currency growth”. But the hefty depreciation of most currencies against the dollar, the reporting currency, dented this performance. For the overall group, net producer revenue was down 9% in dollar terms; earnings before interest, tax and amortisation were down 11% to $2.9-billion.
Compared with other currencies in the SABMiller basket, the rand did not do too badly against the dollar. It was down just 15% on average over the six months. The Colombian peso slumped 29%, the Turkish lira 22%, the Australian dollar 19% and the euro 18% .