USA: SABMiller shares struggle despite in-line results

Russia and China have spurred on SABMiller’s beer sales over the last year, but shares struggled to recover after the brewer remained cautious on future profits in North America, Beverage Daily informed May 18.

SAB's beer volumes grew 14 per cent in Russia in the 12 months up to 31 March, twice as fast as the domestic beer market. The brewer was helped significantly by a 55 per cent volume rise for its imported Czech beer, Kozel.

The rise in Russia was accompanied by strong growth in China, led by the Snow beer brand, as well as gains in Poland, Czech Republic and Romania. Together these emerging markets pushed SAB's sales up 19 per cent to $15.3bn (€12bn).

Analysts at Dow Jones said the group's results were as expected.

Shares in SAB, however, struggled to recover from their recent downward spiral. This reflected a downward trend across London's stock market but also SAB's continued difficulties in its more established US beer market.

SAB's shares have fallen by around five per cent in the last week and have performed worse over the last month than those of several major rivals, including Anheuser Busch and Heineken.

SAB said US beer revenues were flat over the last year, compared to the year before. Volumes dipped by around one per cent, despite continued low, single-digit growth from Miller Lite.

The group renewed its criticism of major rival Anheuser Busch for sparking cuts to beer prices during a difficult time for the market.

The big US brewers, however, have all suffered from a consumer shift towards wine and spirits. Tom Vierhile, editor of Datamonitor's new product database, Productscan Online, told BeverageDaily.com that the major brewers must learn to compete by bringing more romance to beer in the US.

SAB recently launched Miller Genuine Draft in the US, aimed “sophisticated” consumers looking for luxury buys, but the success of this move remained unclear in its full year results.

The group warned in its results statement, meanwhile, that profitability in North America was still uncertain in the short-term.

It said significantly higher aluminium and energy costs, lower prices and investment commitments meant “short-term fluctuations in both competitive price gaps and market segment share positions are to be expected”.

Poor growth in North America and Latin America were the biggest regional contributors to a four per cent drop in SAB's profits, to $2.45bn (€1.9bn), for the full year.

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