Sector movers: SABMiller, Diageo weigh on beverages sector

21st Jan 2013 15:07

Lager maker SABMiller was losing its fizz on Monday, dragging the UK beverages sector lower, a day ahead of its third-quarter trading update tomorrow.The company impressed the market with the release of its first-half results back in November and has seen its shares rise steadily over the festive period. Nevertheless, the company did warn of "more modest" volume growth in Latin America, its largest region, in the second quarter as the pace of economic growth slowed. Revenues rose a better-than-expected 11% year-on-year to $17.5bn in the six months to the end of September, as the firm boasted that the Foster's brand - acquired in 2011 for nearly $11bn - contributed "significantly" to first-half growth.However, according to Harvey Jones from The Motley Fool, while SABMiller is an "impressive operation", the stock now trades at 20 times earnings after five years of steady growth and has a dividend yield of just 1.9%."That's a bit pricey, but many investors will be happy to pay a little extra for this premium strength company," he said.SAB was trading 0.93% lower at 2,956.84p this afternoon.The company was also in the news today after announcing that it is to sell its Panama-based milk and juice business for $86m to narrow the focus of the Cerveceria Nacional division."The divestment will allow us to simplify our business processes and focus on beer and carbonated soft drinks in Panama, where we are the market leader in beer," said Fernando Zavala, the President of Cerveceria Nacional.Sector peer Diageo, which is famous for its Guinness, Baileys and Smirnoff brands, was also in the red today after being hit with ratings downgrade by UBS from 'buy' to 'neutral'.The Swiss broker cut its target price for the stock from 2,050p to 2,000p after reducing its earnings forecasts for 2014 by around 3.0%.Top performing sectors so far todayAutomobiles & Parts 5,796.07 +1.89%Industrial Metals & Mining 3,169.70 +1.65%Health Care Equipment & Services 4,015.33 +1.36%Gas, Water & Multiutilities 5,310.89 +1.34%Mining 19,880.49 +1.16%Bottom performing sectors so far todayBeverages 13,433.80 -1.20%Personal Goods 21,440.46 -1.15%Media 5,050.22 -0.84%Technology Hardware & Equipment 1,034.52 -0.60%General Industrials 3,580.72 -0.57%BC