SABMiller Plc, the world’s second-biggest brewer, reported quarterly sales unexpectedly declined as cold, rainy weather caused customers in Europe and China to drink less beer than anticipated.
The quantity of lager sold fell 1 percent, excluding acquisitions and disposals, London-based SABMiller said today in a statement. Analysts had expected growth of 2 percent, according to the median of 14 estimates compiled by Bloomberg News. No analysts had expected a decline in sales. The shares fell as much as 4 percent in London trading.
“Growth was held back by unseasonably cold and wet conditions in many of our northern hemisphere markets, which negatively impacted beer consumption,” Chief Executive Officer Alan Clark said in the statement.
Brewers are seeking expansion in developing countries as competition from wine and spirits as well as economic stagnation in Europe and the U.S. hold back growth. SABMiller is the brewer with the largest emerging-market footprint compared with main competitors Anheuser-Busch InBev NV and Heineken NV.
The company’s shares were down 3.7 percent at 3,120.50 pence at 12:19 p.m. in London, giving the company a market value of 50 billion pounds ($76.4 billion).
Total so-called organic revenue increased 2 percent.
Lager sales plunged 7 percent in Europe because of bad weather and “continuing weakness in consumer confidence” in countries including the Czech Republic, where flooding shut bars and restaurants. That was worse than the 3 percent drop estimated by analysts.
Cold weather in China also weighed on sales, which edged up 2 percent. A 1 percent decline in Indian volumes and the discontinuation of sales of some licensed brands in Australia restrained overall growth at the Asia Pacific unit to 1 percent, less than analysts’ estimate of 5 percent.
“The first-quarter update reveals worsening trends in a number of SAB’s markets with no indication of an impending rebound,” Eddy Hargreaves, an analyst at Canaccord Genuity, wrote today in a note.
SABMiller is seeking to improve profitability this year as it introduces new products and cuts costs through measures including more efficient purchasing. It said in May it plans to invest about $1.7 billion this year to expand capacity in Latin America, the company’s biggest region, and Africa, where economic growth is spurring a boom in beer demand.
Revenue and volumes rose in Africa, aided by sales of premium brand Castle Light in Tanzania. The amount of lager sold in Latin America increased 2 percent while revenue rose 6 percent, aided by price increases in Colombia and Peru.
U.S. sales to retailers at the MillerCoors unit fell 4.4 percent and revenue fell 3 percent due to cool weather and declines in sales of Coors Light and Miller Lite.
The company said its underlying financial performance is in line with its forecasts. It expects the depreciation of “key currencies” against the U.S. dollar, in which it reports results, to adversely affect reported earnings.