SABMiller, the world’s second-biggest brewer, reported an unexpected drop in third-quarter beer volume as sales were held back by falling demand in China and a decline in Colombia, its biggest market.
So-called organic lager volume fell 1 per cent in the three months ended 31 December,the London-based company said in a statement today. That contrasted with the median estimate of 15 analysts surveyed by Bloomberg for a 0.7 per cent increase.
SABMiller, the maker of Grolsch and Peroni beer, is among European consumer-goods businesses contending with a slowdown in Asia that’s compounded sluggish growth in developed markets. In response, the brewer is looking for new sales avenues, and in November announced a deal in Africa with Coca-Cola to create the continent’s largest Coca-Cola bottling operation.
“The most significant element of the quarter’s results in our opinion was the shortfall in lager volume growth,” James Edwardes Jones, an analyst at RBC Capital Markets, said in a note. “We expect that as a result of this performance group margin expectations will remain under pressure.”
After three days of declines leading up to today’s statement, SABMiller shares gained 2 per cent to 3,410.5 pence at 8:09 a.m. in London.
Bad Weather
Asia-Pacific revenue declined 2 per cent in the quarter, worse than the first-half’s 1 per cent drop, as bad weather in China continued to hurt results there, particularly in the northeast and central provinces, the company said. Volume plummeted 9 per cent in China, and also fell 1 per cent in Australia, another struggling market for the maker of Fat Yak pale ale and Foster’s lager.
“More difficult trading conditions, particularly in China, held back the overall group performance,” Chief Executive Officer Alan Clark said in the statement.
Net producer revenue, a measure that excludes excise taxes, rose 4 per cent, below analysts’ estimates.
In Latin America, sales rose 5 per cent, short of the 7 per cent estimated by analysts. The performance was hurt by a 1-per-cent drop in lager volume in Colombia, where SABMiller commands about 98 per cent of the beer market yet will soon face competition from local soft-drink maker Postobon. SABMiller said the drop was due to shifting consumer-spending patterns, which have been affected by rising household debt and inflation.
“This doesn’t sound like a short-term blip in one of SABMiller’s highest margin markets,” Edwardes Jones said.
Things were no better in North America, where sales fell 1 per cent as volume declines at Coors Light could not offset gains at Miller Lite, which posted its first quarterly volume gain since 2007 thanks to a return to its iconic 1970s can.
As in the previous quarter, the bright spots for SABMiller were Africa -- where revenue rose 7 per cent because of gains in both beer and soft drinks -- and Europe, which posted a 3 percent sales increase, helped by growth in the Czech Republic.
Bloomberg News edited by ESM
