2nd UPDATE: SABMiller Volumes Turn Negative Once Again

22nd Jul 2010 12:46

(Adds analyst comment) By Michael Carolan Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Global brewer SABMiller PLC (SAB.JO) said Thursday its volumes once again declined in the first quarter of its financial year, despite rising briefly in the previous three months, though it added that volumes did begin to pick up at the end of the quarter. The London-based brewer said in a trading update that its volumes in the first three months of its financial year were 1% lower on the year, after the momentum of the previous quarter--which saw a 2% rise in volumes--failed to continue into the new year, despite the benefits of the soccer World Cup. "As anticipated at the start of the year, consumer demand has remained uneven, with improvements seen in some countries and weakness in others," said Chief Executive Graham Mackay. SAB's volume declines are usually offset by price increases and the company said its results would benefit from the impact of pricing as well as lower raw material costs. The company is likely to have taken advantage of duty rises to put through its own price increases, said Evolution analyst Jamie Norman who warned against reading too much into volume figures, as they "rarely tell the whole story." SAB Miller said that "lager volume performance improved through the quarter on an organic basis, showing growth in June compared to the prior year." The volume decline was well flagged and June's performance was a positive surprise. By 1130 GMT, the company's shares were up 23 pence, or 1.2%, at 1925 pence. The brewer of Castle, Pilsner Urquel and Peroni lager warned in May it didn't expect a recovery before the second half of the current financial year, despite the 2% rise in volumes in the fourth quarter. SAB's financial year ends on March 31. "Overall, the financial performance of the group in the quarter was in line with our expectations," said Mackay. But volumes in South Africa were below expectations and the country is the one area of concern for the company, according to Evolution's Norman. After an 8% rise in volumes in the previous quarter, to post a flat volume performance in the latest quarter, despite the benefits of the soccer World Cup, was surprising, he said. Volumes in South Africa suffered from poor weather and the lack of an Easter peak in April, but they grew over the rest of the quarter to end level with the previous year. Norman said that beer might be losing out to spirits in South Africa or SAB could be losing market share to Diageo PLC (DEO) and Heineken NV's (HEIA.AE) joint venture. Either way, it looks as if SABMiller had a terrible April, he said. In the rest of Africa, volumes grew 7%, with strong performances in Mozambique and Uganda offsetting declines in Tanzania. In Europe, volumes declined 9%, hit by poor economic conditions, some sharp excise rises and severe flooding in many markets. "However improved weather conditions assisted a return to volume growth in June," the company said. Asia volumes were up 4%, with India reporting significant growth and China broadly in line with last year. Latin American volumes grew 1%, despite the effect of a sharp rise in sales tax in Colombia. The company's U.S. joint venture with Molson Coors Brewing Co. (TAP) MillerCoors saw sales to retailers drop 2.4% in the quarter "in a market that remained soft." -By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; [email protected] (END) Dow Jones Newswires July 22, 2010 07:46 ET (11:46 GMT)