SABMiller Misses Estimates in Growth Markets as Europe Gains

SABMiller Plc (SAB), the world’s second- biggest brewer, reported sales in the growth markets of Latin America and Africa that missed analysts’ estimates, taking the shine off an improved performance in Europe.

Organic lager volume rose 4 percent in the six months through Sept. 30, the London-based company said today in a statement. That compared with the median estimate of 10 analysts surveyed by Bloomberg for a 4.4 percent increase. Growth slowed from a 5 percent increase in the first quarter.

Gains of 4 percent in Latin America and 6 percent in Africa were below median estimates of 5.5 percent and 8.5 percent, respectively. In Europe, volume increased 9 percent, outpacing the 6 percent estimate, as price cuts and demand for economy brews fueled demand among cash-strapped consumers.

“All key growth emerging-markets were below expectations,” said Pablo Zuanic, an analyst at Liberum Capital in London. “Given the Europe growth is coming from promotions and growth in the value segment, we would say the second-quarter miss is of significance,” he wrote in a note.

Latin America is the largest region for sales and profitability at SABMiller, which is among brewers 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 the African unit, which excludes South Africa, a tax increase in Tanzania restrained growth, it said.

Shares Drop

SABMiller fell as much as 1.5 percent to 2.613.5 pence in London trading, the lowest intraday price since July 5. The stock was down 0.6 percent at 2,640 pence as of 9:37 a.m.

Sales to retailers at MillerCoors LLC, the company’s U.S. joint venture with Molson Coors Brewing Co., slid 1.9 percent as cheaper beer varieties and its Miller Lite brand declined.

SABMiller, which bought Foster’s Group Ltd. last year for about A$10.5 billion ($10.9 billion) to take control of about half the Australian beer market, said volume slid 13 percent in the country. The figure included the impact of the loss of two business days and the termination of some licensed brand sales.

Excluding Foster’s, Asian volume rose 5 percent, the company said, missing the 7 percent estimated by analysts.

South Africa

SABMiller may see “some negative sentiment on the back of a continuing weak performance from Foster’s,” Phil Carroll, an analyst at Shore Capital in London, wrote today, cutting his recommendation on the stock to hold from buy.

South African lager volume rose 1 percent, meeting estimates. The company, which competes with Diageo Plc and Heineken NV in the country, continued to gain market share, it said, aided by its Castle Lite brand.

Group revenue grew 8 percent in the first half, excluding the effects of currency fluctuations and acquisitions.

“Overall, financial performance for the half year was in line with our expectations,” SABMiller said.

To contact the reporter on this story: Clementine Fletcher in London cfletcher5@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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