SABMiller’s Sales Increase on Pricier Beer in Africa, Europe

SABMiller Plc (SAB), the world’s second-biggest brewer, reported first-quarter revenue growth that beat estimates as it sold more expensive beer in Africa and Europe, offsetting lager volume declines in Latin America and Australia.

Revenue advanced 6 percent in the three months through June, the London-based maker of Grolsch and Peroni said in a statement today. Analysts expected 4.6 percent growth, according to the median of 13 estimates compiled by Bloomberg News. The volume of beer sold rose 1 percent, compared with a 2.7 percent median estimate. Both measures exclude the effects of acquisitions, disposals and currency fluctuations.

“Strong growth in Africa, South Africa and Europe was balanced by slower momentum in North America,” Chief Executive Officer Alan Clarke said in the statement, citing “innovations and improved trade execution” for helping increase revenue growth.

SABMiller, the brewer founded more than a century ago in South Africa, has the largest exposure to emerging markets of the major beermakers, which has helped it offset tough conditions in the U.S., where its MillerCoors LLC joint venture operates, and Europe over the last few years. The results compare with the fourth quarter’s 1 percent lager volume growth and 2 percent revenue growth.

Shares Rise

The company had said when it reported results in May that it saw little change in business conditions this year and would focus on creating innovative products and packaging to capture growth in regions including Africa and Latin America.

SABMiller’s shares rose 1.2 percent to 3,405 pence as of 8:01 a.m. in London. The shares have risen 9.5 percent this year.

“This is certainly a better update than we and the market anticipated, especially in relation to Africa and South Africa,” wrote Phil Carroll, an analyst at Shore Capital in Liverpool, England, in a note.

Sales rose 11 percent in Africa aided by soft drinks and added capacity in Nigeria, and 12 percent in South Africa, helped by growth in more expensive beers including Castle Lite. Revenue increased 8 percent in Europe, following a poor performance in the same period a year ago and aided by Easter.

Lager volumes, however, declined in Latin America, the company’s largest region, and Australia, where it bought Foster’s Group Ltd. in 2011 for about A$10.5 billion ($9.9 billion).

Lager sales in Colombia plunged 6 percent after SABMiller raised prices and the company restricted alcohol sales during two rounds of presidential elections, while volume fell 3 percent and revenue 6 percent in Australia due to negative consumer sentiment, SABMiller said. North American revenue rose 3 percent as sales to wholesalers slid 1.7 percent as growth in Redd’s offset declines in Miller Lite and Coors Light.

SABMiller said July 18 it sold its stake in South African hotelier Tsogo Sun Holdings Ltd. (TSH) and will reinvest the proceeds in its beverages business. The company said today it expects a share buyback by Tsogo that formed part of the deal will be completed Sept. 5, at which point SABMiller will no longer have a stake.

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

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Thomas Mulier, John Bowker

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