SABMiller Sales Hit by Economic Slowdown
Across the group, revenue benefited from firm pricing in the prior year, and we continued to focus on cost efficiencies and, in certain markets, restructuring activities in order to reduce our cost base.
03 Aug 2009 At the Annual General Meeting of SABMiller plc (SABMiller), Graham Mackay, chief executive of SABMiller, commented on the group's performance for the three months ended 30 June 2009 . The calculation of the organic growth rates below excludes the effects of acquisitions and disposals.
Mr Mackay said: "Lager volumes for the quarter were level with the prior year on an organic basis while soft drinks volumes were 2% ahead, driven by strong sales in Africa. The global economic slowdown has continued to dampen consumer demand, although the impact on volumes has varied between our markets. Across the group, revenue benefited from firm pricing in the prior year, and we continued to focus on cost efficiencies and, in certain markets, restructuring activities in order to reduce our cost base. Financial performance for the quarter was in line with our expectations.
"In Latin America, lager volumes for the quarter were level with the prior year. In Colombia, lager volumes were 1% below the prior year, an improvement in performance compared to recent quarters reflecting some easing in economic conditions, an expansion of pre-selling activities and penetration of our premium brands. We achieved a substantial further gain in our share of the alcohol market versus the prior year. In Peru, we grew market share through successful portfolio management, with lager volumes 1% below the prior year in a market down 6%. Our business in Ecuador remained resilient, growing lager volumes 5% notwithstanding double digit growth in the comparative period. Panama grew lager volumes 10%, although losing share in a rapidly growing market. Tough economic conditions, a major earthquake and the current political turmoil all combined to drive a 13% decline in lager volumes in Honduras. Soft drinks volumes in the region were 1% below the prior year on an organic basis.
"Europe lager volumes were 7% below the prior year on an organic basis as household debts, tighter credit control and rising unemployment continued to depress consumer spending and resulted in beer market contraction across the region. Poland's lager volumes were down 8% on an organic basis with an excise increase, double-digit food inflation and bad weather all significantly impacting the beer market. However, strong brand equities drove market share growth. Czech Republic domestic lager volumes declined 4% with a fall in on-trade consumption reflecting a soft local economy, reduced tourism and bad weather. Our volume market share was marginally down as we continued to focus on driving our premium brands. In Russia, lager volumes fell 9% but market share remained level. In Romania, lager volumes were down 3% against a strong prior year comparative growth of 22%. We continued to grow share and achieved market leadership, in a market which declined 9%. In the United Kingdom, Peroni Nastro Azzurro delivered double digit growth in a market down 6%.
"In the three months to 30 June 2009, MillerCoors U.S. domestic volume sales to retailers ("STRs") were down 0.8% against the prior year on a pro forma basis. Five of our six focus brands continued to deliver volume growth. Premium light brand volumes were down slightly in the quarter with a mid-single digit decline in Miller Lite volumes partly offset by low single digit growth of Coors Light and accelerated growth of MGD 64. Our craft and imports business grew volumes slightly, led by continued growth in Blue Moon and Leinenkugel's, despite trading down and reduced on-premise occasions in the industry. The below premium category grew volumes in the low single digits with strong double-digit growth from Keystone Light in particular. Domestic sales to wholesalers ("STWs") were down 1.1% against the prior year on a pro forma basis.
"Africa and Asia delivered lager volume growth of 11% on an organic basis for the quarter. In Africa, lager volumes were 4% ahead of the prior year with strong performances from our businesses in Uganda and Zambia, and from our associate Castel. Sales in Botswana continued to be impacted by the 30% social levy on alcohol, with lager volumes declining by 41%. Soft drinks sales in Africa grew 12% on an organic basis with good volumes from Castel and improved supply and production in Angola. China's organic lager volumes grew 17% in a resilient economy, led by a strong performance in the Central region and further national market share gains for the Snow brand.
"In South Africa, the market grew by some 2% benefiting from the Easter peak trading period in the current year. The underlying market continues to be affected by weakening consumer demand, rising unemployment and constraints on the sale of alcoholic beverages in the Western Cape. Our lager volumes were down 2% as we lost market share, principally in the premium segment. Soft drinks volumes were in line with the prior year. On 1 July 2009, we announced a proposal to enter into a broad-based black economic empowerment transaction in South Africa. This will involve an equity issue of approximately 10% of our South African Beverage business to a broad base of black participants, reflecting the group's long-standing commitment to socio-economic progress in South African society.
"On 29 May 2009, we completed the acquisition of the outstanding 28.1% minority interest in our Polish subsidiary, Kompania Piwowarska S.A, in exchange for the issue of 60 million new SABMiller shares.
"On 17 July 2009 we completed a successful EUR1 billion bond issue, with a coupon of 4.50%, under our US$5 billion Euro Medium Term Note Programme. The net proceeds of the offering will be used to repay existing indebtedness and for general corporate purposes.
