South Africa: SABMiller may announce little changed solid profit

SABMiller, which brews Pilsner Urquell and Peroni Nastro Azzurro as well as Castle Lager, may say full-year profit was little changed after a one-time gain was not repeated, the Business Report commented May 17.

Net income probably fell to $1.51 billion (R9.6 billion) from $1.52 billion a year earlier, according to the mid-market estimate of four analysts polled.

Profit in the previous year was boosted by one-time gains, including a profit of $239 million from selling a stake in South Africa's Edgars Consolidated Stores.

SABMiller, like competitor InBev, is moving into faster- growing economies as the world's largest beer makers push to buy assets, increase their share of emerging markets and counter weaker demand in markets such as the US and western Europe.

The purchase of Bavaria last year gave SABMiller a brewer that is a market leader in Colombia, Peru, Ecuador and Panama.

Profit excluding one-time gains and costs, or so-called adjusted earnings, probably rose 22 percent to $1.5 billion, the analyst survey shows, while earnings a share on that basis rose 6.9 percent to $1.08.

Group sales, excluding the share of associates' revenue, rose 18 percent to $15.2 billion, according to the median estimate of seven analysts.

Martin Yule, an analyst at Morgan Stanley, said: "We expect a very solid full-year 2006 result. The largest contributors to profit improvement apart from the acquisition of Bavaria are Europe, Africa/Asia and the South African business." Yule has an overweight rating on the stock.

SABMiller said last month that it sold 5 percent more beer excluding acquisitions in its latest fiscal year, led by gains in Europe and Asia. The brewer sold 1 percent more beer in South Africa, its original domestic market. Volumes excluding acquisitions increased 14 percent elsewhere in Africa and in Asia, and 5 percent in Europe, helped by Poland, Russia and Romania.

In North America, domestic sales of Miller beer to US retailers fell 1 percent amid a price war with Anheuser-Busch, the world's largest brewer, the company said last month.

SABMiller is due to report annual earnings May 18 at 7am in London.

SABMiller shares rose 10p to £10.94 (R132) on the London Stock Exchange May 16.

The South African unit, SAB, increased 64c to R130.60 on the JSE in Johannesburg, while the Top40 index fell 0.9 percent.

SABMiller is expected to post pre-exceptional EPS of 107.4 cents Thursday, May 18, +6.3% from 101 cents the previous year, according to a consensus of 4 analysts' forecasts surveyed by Dow Jones Newswires.

EBITA seen at $2.73B, +28% from $2.13B. A strong contribution from Central Europe, Africa, Asia and last year's Bavaria acquisition will be partly offset by a slowdown in the South African market and tighter margins in the US, according to analysts. Shares +0.7% at 1,092p.

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