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Negative Points: Organic lager volume growth came in at the lower end of analyst estimates, with trading across the group's regions mixed. For its European business, management highlighted "depressed consumer confidence". Volumes in Poland were down 2% and declined by 11% in the Czech Republic. Organic lager volumes in Asia Pacific declined by 1% (this excludes Australia volumes altogether), largely as a result of subdued volumes in China. Management pointed towards the exceptionally cold and wet winter across the country. China is the world's biggest beer market. The group's relatively recent acquisition of Australian brewer Fosters has raised concerns. The Foster's deal increased the group's exposure to mature markets. In Australia, as of the November half year results, volumes declined by 13% as Foster's lost share in a shrinking market. Financing for the deal has helped push group net debt up from $6.5 billion to over $17 billion as of the half year point. Raw material and input cost pressures remain a concern. Currency movements had an adverse impact on group revenue growth in the first half, principally due to the weakening of the South African rand and Central European currencies.
Highlights: Organic group revenue grew by 8% Lager volumes on an organic basis grew by 2% Soft drink volumes on an organic basis grew by 2%
Third quarter trading statement: The update broadly reassured investors - the share price moved marginally higher in early trading. While growth in organic lager volumes proved to be at the lower end of forecasts, overall group revenue growth on an organic basis (minus acquisitions and disposals) came in at the upper end of forecasts. On the downside, European lager volumes rose by 1% on an organic basis, with management highlighting that "some beer markets were impacted by depressed consumer confidence" during the period. Furthermore, lager volumes in Asia Pacific declined by 1% on an organic basis (which excludes Australia volumes altogether), largely as a result of subdued volumes in China, which declined 3%. This was mainly due to an exceptionally cold and wet winter across the country according to management. More positively, its Latin American business saw lager volumes up by 6%. In Africa, the board noted that "most markets continued to grow strongly", while at its South African business, lager volumes also rose, growing by 3% over the period. In all, management noted that "overall, financial performance for the quarter was in line with our expectations." For now, whilst concerns regarding both the group's relatively recent acquisition of Australian company Fosters and the outlook for major world economies such as China continue to weigh, the group's exposure to expanding disposable incomes in the Emerging Markets continues to appeal
However, according to Harvey Jones from The Motley Fool, while SABMiller is an "impressive operation", the stock now trades at 20 times earnings after five years of steady growth and has a dividend yield of just 1.9%. "That's a bit pricey, but many investors will be happy to pay a little extra for this premium strength company," he said. SAB was trading 0.93% lower at 2,956.84p this afternoon.
Lager maker SABMiller was losing its fizz on Monday, dragging the UK beverages sector lower, a day ahead of its third-quarter trading update tomorrow. The company impressed the market with the release of its first-half results back in November and has seen its shares rise steadily over the festive period. Nevertheless, the company did warn of "more modest" volume growth in Latin America, its largest region, in the second quarter as the pace of economic growth slowed. Revenues rose a better-than-expected 11% year-on-year to $17.5bn in the six months to the end of September, as the firm boasted that the Foster's brand - acquired in 2011 for nearly $11bn - contributed "significantly" to first-half growth.
SAB Miller: JP Morgan alters target price from 2855p to 3645p, while its overweight rating remains unchanged.
As we head into the latest trading announcement from SABMiller (SAB), it is worth remembering that the brewing giant reported a mixed picture at the end of November, with a slowdown in some of its key markets. Although the impact of the update was somewhat mitigated by a dividend hike, this still leaves the possibility that certain geographies could weigh on the fundamental performance, with no prizes for guessing the Eurozone is currently the main culprit. Nevertheless, any signs of stabilisation in this region could improve SABMiller’s standing with investors, even though the shares are already pushing well into record 52-week high territory.
SABMiller: Barclays Capital raises target price from 2800p to 3100p, overweight rating kept. Jefferies raises target price from 2990p to 3200p, buy recommendation reiterated. Citigroup moves target price from 3000p to 3200p, buy rating unchanged.
Analysts at broker Jefferies were this morning praising brewery group SAB Miller's interim results out last week. In particular, they highlighted how the company's higher innovation, better execution and increasing cost synergies gives them confidence on the company's future ability to deliver peer-beating compound annual growth rates in its earnings per share of 14%. In turn, they were of the opinion that the above underpins a premium valuation rating of 17 times the company's earnings (versus peers trading at approximately 15 times). For all of the above reasons they decided to reiterate their buy recommendation on the shares and increase their price target to 3,200p.
Top Director Sells SABMiller (SAB) Director name: Mr James Wilson Amount sold: 26,000 @ 2,789.25p Value: £725,205
James Wilson, the Chief Financial Officer (CFO) of drinks giant SABMiller benefitted from the recent surge in the group's share price following the group's first-half results yesterday. The company said today that Wilson had on Thursday exercised options to buy 13,000 shares at an option price of 1,250p per share and a further 13,000 at an option price of 1,231p per share. He then sold the 26,000 shares at a price of 2,789.25p per share. The stock closed Thursday's session at 2,801p, up 6.3% on the day, following the release of its interim figures which beat consensus forecasts for revenue, profit and margins. Credit Suisse reiterated its 'outperform' rating on the shares this morning, saying that while the stock is trading at a 6% premium to the wider consumer staples sector, it believes it can "re-establish a c10% premium rating".
SABMiller: Deutsche Bank raises target price from 2700p to 2800p, hold recommendation reiterated. JP Morgan raises target price from 2770p to 2855p, overweight rating kept. Credit Suisse raises target price from 2950p to 3100p, outperform recommendation maintained. Nomura raises target price from 2600p to 2800p and upgrades from reduce to neutral. Societe Generale raises target price from 2800p to 2970p, hold recommendation remains unchanged.
Brewing giant SABMiller (SAB) announced that its UK subsidiary posted a 5% increase in domestic volumes in the 6 months ended 30th September, against a backdrop of a 4.6% drop in total beer volumes in the UK. This resilient trading was boosted strong sales of its Peroni brand which is now widely available on draught. Management believe that results for the 6 month period could have been even better if the summer had delivered sustained good weather. Away from the UK, emerging markets also drove growth upwards. The shares climbed by 168p to 2,801p.
Since the October trading statement, shares have been flat, with the broker highlighting investors' concerns about slowing lager volume growth in the second quarter (from 5% in the first quarter to 3%). Meanwhile, there were worries over margin delivery given currency, input cost an Eastern European headwinds. So, with EBITA margins coming in ahead of expectations, Jefferies said: "Reason to cheer for investors, we believe." "The flat share price performance of SABMiller since the trading update in October has seen its peers catch up in terms of valuation with the company trading on a calendar 2013 price-to-earnings multiple of 15.8x (vs peers on c. 14.3x) which we believe remains attractive given SABMiller's higher-growth profile and strong emerging market footprint."
Jefferies has reiterated its 'buy' rating and 2,990p target price for drinks group SABMiller after a better-than-expected first half. Earnings before interest, tax and amortisation (EBITA) and earnings per share (EPS) came in 1% and 4% ahead of consensus estimates. Also the broker said: "Despite some concerns about margin delivery in H1 due to inputs cost/currency/E-European headwinds, the company delivered EBITA margins of 18.2%, 60 basis points ahead of consensus." However, while the 8% organic revenue growth was pre-reported in last month's trading update, reported revenues missed consensus estimates by 2.5% owing to a more adverse currency impact. Nevertheless, the broker predicted that the figures would be taken well by the market and they were, with the stock up 5.98% at 2,790.5p in mid-morning trade.
Positive Points: Profits in Latin America, the company's largest region, rose 15% in the half, helped by selective price increases and savings from more efficient purchasing. The group acquired Australian brewer Foster's in December 2011 in a deal valued around US$10 billion, opening a near half share of the Australian beer market. Management declared that the Foster's integration programme was progressing well with synergy delivery and capability build running ahead of schedule. It "contributed significantly" to the increase in profits, added the company. Investment in brand development will remain a group priority, along with a focus on innovation, distribution and systems to sustain growth. SABMiller is the world's second biggest brewer by volume after Anheuser-Busch InBev. Net debt was reduced by around US$750 million to US$17.1 billion. The group's dividend policy continues to be progressive.
Negative Points: In Europe, profits fell 10%, a result of higher raw material costs and an increased level of marketing spend. Performance was also affected by the shift from on-premise to off-premise consumption as well as discounted competition. Raw material and input cost pressures are expected to continue at a level similar to that of the first half of the year, said the group. Currency movements had an adverse impact of six percentage points on group revenue growth in the first half year, principally due to the weakening of the South African rand and Central European currencies. Industry specific risks include exposure to changing consumer fashion, affordability of its products and spending trends. It is possible that harsher anti-alcohol laws or an increase in beer tax excise could impact on SAB's businesses. With the group's considerable emerging markets exposure, a general slowdown in these economies would impact on group profits.
Financial Highlights: The brewer posted an adjusted pre-tax profit of $2.76 billion in the six months to the end of September. A 12% rise from the $2.45 billion made in the same period a year earlier. Revenues climbed 11% higher to $17.47 billion. An interim dividend of 24.0 US cents per share was declared, up 2.5 cents (12%) from the prior year's interim dividend.
Interim results: SABMiller profits boosted by Foster's acquisition. London headquartered SABMiller registered a 12% rise in its first half year profits, boosted by the acquisition of Australian brewer Foster's and strong growth in Latin America, its largest region. Profitability was boosted by cost savings and acquisitions, offsetting higher raw materials prices and adverse foreign exchange swings stemming from weakness of the South African rand and central European currencies. In Latin America, profits rose 15%, helped by selective price increases and savings from more efficient purchasing, SABMiller said. Elsewhere, development of brands and product ranges continued across the group's portfolio were supported by further improved operating processes. The acquisition of Foster's in particular had "contributed significantly". Total beverage volumes were 4% ahead of the same period a year ago with lager volumes up 4%, soft drinks volumes up 6% and other alcoholic beverages up 12%."We grew volumes and revenues across most regions despite a moderation of growth in some emerging markets," the company said in a statement.
Company overview SAB Miller is one of the world's largest brewers, with more than 200 beer brands and some 70,000 employees in over 75 countries. It is also one of the world’s largest bottlers of Coca-Cola products. The group's portfolio of brands includes premium international beers such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller PLC's primary listing is on the London Stock Exchange, with a secondary listing on the Johannesburg Securities Exchange in South Africa.
Markets are expected to be pretty subdued on Thursday with Wall Street closed for Thanksgiving; here in the UK however, investors will be looking out for first-half results from beverages giant SABMiller and High Street retailer Mothercare. As for SABMiller, the company saw good growth in lager volumes shipped across most regions in the first half of its financial year. On an organic basis, lager volumes for the six months to the end of September were 4% ahead of the prior year. Soft drinks volumes were 6% higher year-on-year on an organic basis. Charles Stanley is forecasting revenue of $16,940m, leading to profit before tax of $2,575m, but warns there is likely to be material variation in trading conditions by regions. SABMiller "remains well placed to benefit from growth in urban middle class populations in emerging markets, which aspire to drink branded beer and can increasingly afford to do so," notes Charles Stanley's Sam Hart. "Trading conditions in developed markets are likely to remain more challenging, but significant potential remains to improve operational efficiency in these markets and they will continue to be an important source of cash to invest in faster growth markets," Hart added.
SABMiller's (SAB LN) Thursday interims are expected to continue the good news after a statement in October reported good growth in lager volumes shipped across most of regions served by the brewing giant. Overall, financial performance for the half year is expected to be in line with management's expectations, a fact noted by Galvan Research at the end of October when we reiterated our buy call for the shares. Shares have consolidated since then, so if the results bear out expectations it would not be unreasonable to expect a leg higher for the shares.
Positive Points: "Overall, financial performance for the half year was in line with our expectations," SABMiller said. Lager volumes in Asia Pacific grew by 5% on an organic basis, while reported volumes grew by 17% reflecting the acquisition of Foster's and other acquisitions in China. In South Africa lager volumes grew by 1%. Volume growth was driven largely by ongoing brand investment combined with a continued focus on customer service. SAB Miller is one of the world's largest bottlers of Coca-Cola products. The group acquired Australian brewer Foster's in December 2011 in a deal valued around US$10 billion, opening a near half share of the Australian beer market. SAB Miller is the world's second biggest brewer by volume after Anheuser-Busch InBev. The group's dividend policy continues to be progressive.
Negative Points: Latin America is the largest region for sales and profitability at SABMiller, and is seeking to expand in emerging markets as economies slow elsewhere. Sales in the region were held back by a more "modest pace" of economic growth in the second quarter and weaker consumer sentiment, the company said. In Australia, lager volumes declined by 8% for the half year. The decline was partly because of the termination of some licensed brands after SAB Miller's purchase of Foster's in December 2011. Trading for the group's US MillerCoors’ business proved to be disappointing, with sales to retailers down by 1.9%. Industry specific risks include exposure to changing consumer fashion, affordability of its products and spending trends. It is possible that harsher anti-alcohol laws or an increase in beer tax excise could impact on SAB's businesses. With the group's considerable emerging markets exposure, a general slowdown in these economies would impact on group profits.
HL Comment (18 October 2012) Trading statement: SAB Miller revealed a 4% rise in half year beer volumes, benefitting from growth across most regions that offset a slowdown in demand in its key Latin American market. Beer volumes in Latin America, which represent around 32% of profit, grew by 4%, down from 8% in the same period a year ago with the brewer reporting weaker consumer sentiment in recent months. In Europe, lager volumes rose by 9% driven by selective price reductions, with the Euro 2012 football tournament boosting Polish beer sales, and demand for its Peroni brand pushing up domestic volumes by 5% in the UK. Overall, financial performance for the half year was in line with management's expectations