SABMiller H1 Profit Up, Sees Challenging Conditions Ahead

13-Nov-2014 - United Kingdom

British brewer SABMiller Plc (SAB.L, SBMRY.PK) Thursday reported higher first-half profit amid challenging trading conditions, helped by rise in revenues and improved volumes. The firm also boosted its dividend by 4 percent.

Looking ahead, SABMiller expects trading conditions to remain challenging, but anticipates to continued growth in volume and NPR.

For the first half ended September 30, 2014, the company's profit before tax increased to $2.83 billion from $2.43 billion in the previous year. Adjusted pre-tax profit was $2.94 billion, while it totaled $2.87 billion last year.

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Profit attributable to owners of the parent advanced to $1.97 billion from $1.71 billion, and earnings per share totaled 121.6 US cents, up from 106.0 US cents last year.

Revenue grew to $11.37 billion from $11.10 billion in the preceding year. According to the company, its resilient top line growth was helped by its Africa and Latin America businesses, but was impacted by weaker second quarter trading conditions in China and Australia.

Group net producer revenue or NPR was $14 billion, up 2 percent on a reported basis, and an increase of 5 percent at constant currency. NPR per hectolitre was up 3 percent on pricing and premiumization initiatives.

The firm noted that Group net producer revenue was driven by lager growth in Africa and Latin America and strong performance in its soft drinks businesses in Africa, Latin America and Europe.

Meanwhile, lower lager sales in parts of Europe and Asia Pacific resulted in a slight decline in EBITA margin in the half year.

Total beverage volumes edged up 1 percent on an organic basis, with lager volume declining 1 percent. Group volumes, on a reported basis, rose 2 percent.

Soft drinks volume growth was 9 percent, on both reported and on an organic basis, driven by Africa, Latin America and Europe.

Further, the board has declared an interim dividend of 26 US cents per share, up 4 percent from last year, to shareholders of record on November 28, 2014, payable on December 5.

The firm sees raw material unit input costs to increase by low single digits in constant currency terms with some markets continuing to be hurt by foreign exchange movements on imported raw materials.

Alan Clark, chief executive of SABMiller said, "We are well-placed to capture future top line growth opportunities in both emerging and developed markets and are making good initial progress on our plan to realise US$500 million from operational efficiencies and cost savings."

SAB.L is currently trading at 3,513.50 pence, up 0.06 percent.

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