China rebound lifts SABMiller
SABMILLER reported full-year earnings that beat analysts’ estimates on a rebound in China, but it expected business conditions and currency headwinds to remain challenging, the world’s second-biggest brewer said.
The maker of Peroni, Grolsch and other beers reported operating earnings fell 1 percent to $6.37 billion (R76.9bn) in the year to March, above analysts’ average estimate of $6.23bn, according to a consensus compiled by the company. Net producer revenue declined 2 percent to $26.29bn, also ahead of analysts’ estimates of $26.23bn.
Excluding the impact of currency fluctuations, revenue was up 5 percent and earnings before interest, tax and amortisation (Ebita) was up 6 percent, helped by price increases and cost cuts.
The strong US dollar reduced the value of international sales and profits and increased raw material costs since commodities are often traded in the US currency.
SAB had already reported that the company’s worldwide beer volume was flat last year, with the soft-drink volume up 8 percent.
Cost-saving plan
Growth in Africa and Latin America was offset by weakness in North America and China, though China returned to growth during the last three months of the year.
Looking ahead, the company said it expected the trading environment to stay challenging and that its business would continue to be hit by currency volatility.
“However, we are confident in our strategy to drive superior long-term growth,” the company said, without giving a specific forecast.
“We’re giving a sense of confidence over the longer term but we’d rather avoid short-term forecasts,” chief executive Alan Clark said.
“Things can shift so quickly in the short term that it’d just be too risky for me to give a forecast.”
SABMiller, along with competitor Anheuser-Busch InBev, is also pushing new products such as lower-alcohol brews to capture drinkers who favour spirits or wine over beer.
SABMiller gets more revenue from developing regions than other major brewers.
The brewer said its costsaving plan delivered $221m in the year just ended, and was on track for savings of $500m a year by 2018.
It also took a $313m impairment charge on its business in India due to increased regulation and tax burdens, and a $63m charge on its Russian operations.
The brewer had already reported a 4 percent increase in so-called net producer revenue, a measure that excludes excise taxes, thanks to gains in Africa, Latin America and a rebound in sales volumes in China.
In its Asia-Pacific region, the company said that profit margins widened in the second half of the year after cold and DELTA Corporation’s full-year profit declined 13 percent as a sluggish Zimbabwean economy curbed consumer spending, the brewer that is the southern African nation’s biggest company by market value said.
“The slowdown in the economy resulted in a very difficult trading year,” the Harare-based unit of SABMiller said yesterday. “Consumer spend declined rainy summer weather in China hurt the group’s firsthalf results “significantly”.
Shares were up 1.8 percent in early trading. At the close of JSE trade yesterday, the share price was 0.21 percent higher at R665.19. significantly.”
Zimbabwe’s main stock index, which began using US dollars after the country abandoned its local currency amid soaring inflation, has dropped 5.5 percent this year, the worst performance after Mauritius among 14 benchmark subSaharan African indexes tracked by Bloomberg.
Economic growth is set to slow to 2.8 percent this year from an estimated 3.2 percent last year, according to the International Monetary Fund.
Delta’s net income for the year to March dropped to $92.8 million (R1.1 billion) from $107.2m, while revenue declined 4 percent to $576.6m, the company said. Earnings per share decreased to 7.44c from 8.55c. – Bloomberg