Thursday May 15, 09:55 AM
SABMiller adj pretax profit up 15 pct on mix and price improvements UPDATE
(Adds chief executive comment from conference call)
LONDON (Thomson Financial) - SABMiller Plc (LSE: SAB.L - news) . said full-year
pretax profit increased 15 percent to $3.64 billion thanks to price increases and mix improvements, beating analyst expectations of $3.54 billion.
The Pilsner Urquell and Miller Lite brewer said it sees input price pressure continuing to grow in the current year, although pricing and mix benefits are again expected to more than compensate for these cost increases.
In a conference call this morning, chief executive Graham Mackay said input costs increased 6 percent for the year to end March, with raw materials -- including barley and malt -- rising by around 9 percent. However, he said the group managed to more than recover the absolute cost increase through finished goods price increases.
He added that for the current year, SABMiller sees costs increases being 'a few percentage points higher', with cost of goods up in the high-single digits and raw materials up in the low-double digits.
While Mackay stressed that the impact of barley and hops price hikes are not that great on the final cost of beer, he also added: 'There is considerable reason to hope that the barley shortages have peaked.'
He believes that there may be a softening in barley prices this year after last year's harvests were affected by poor growing conditions, helping drive up prices.
The brewer, which specialises in emerging markets, said the economic outlook across its global footprint remains positive.
Mackay said the underlying growth drivers in the Chinese economy and other emerging economies 'are very much intact' after SABMiller said momentum in the world's largest beer market China slowed in the second half of the year. Organic volumes in China grew 15 percent for the year, after organic growth of 30 percent in the first half.
Mackay attributed the slowdown to sharp price increases and said the group believes growth will resume 'pretty shortly' as there is 'still upward momentum in China'.
SABMiller also noted a turnaround in the performance at its previously struggling U.S. business Miller Brewing, which saw EBITA increase 27 percent to $477 million and EBITA margin improve 160 basis points to 9.3 percent. SABMiller said its premium brand portfolio in the United States increased sales by 49 percent over the course of the year to end March, with the launch of lime- and salt- infused Miller Chill exceeding expectations.
Mackay said: 'Of all consumer economies we are involved in around the world, I would say the United States has been among the least affected by the current slowdown -- certainly at the level where we are operating it has been relatively resilient.'
He noted that there has been a slowing in the drift towards premium products in the country and and some increase in the general performance in economy brands but said the underlying trends remain intact.
'Beer in the United States is an affordable everyday luxury and it hasn't been too dramatically affected so far,' he said.
SABMiller today said it has taken a $51 million charge in respect of staff retention arrangements ahead of its planned US merger with Molson Coors Brewing Company (NYSE: TAP - news) 's US division Coors Brewing Company. The group said it expects to record further charges up to the completion of the deal, which is not expected to occur before the middle of this calendar year.
SABMiller declared a full-year dividend of 58 cents, up 16 pct on the previous year.
At 9.30 a.m., shares in the brewer were up 62 pence -- some 5.15 percent -- to 1,265 pence.
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