SABMiller Mozambique 2011 Credit: Jason Alden/OneRedEye Image is copyrighted

Ann Crotty

The SABMiller share price surged 5.8 percent to close at R395.87 yesterday, following the release of interim results that were marginally ahead of analysts’ expectations.

The results, yet again, revealed the benefits of the group’s regional diversity and its focus on emerging markets.

Helped by an excellent performance from its Latin American and African operations, the group managed to report a 17 percent increase in earnings before interest, tax and amortisation (Ebita) to $3.17 billion (R28.2bn). The strong demand in the group’s emerging markets again helped to offset the weak conditions in Europe and in the US.

The increase in SABMiller’s group Ebita was 32 percent in rand terms.

South African Breweries’ (SAB’s) impressive 11 percent increase in Ebita to R3.5bn was muted by the weakness in the rand, which saw its contribution in dollar terms drop by 4 percent to $426 million.

SAB comprises the local beer business, soft drinks division ABI, Appletiser and a 29 percent stake in Distell.

Commenting on the results, Graham Mackay, the executive chairman of SABMiller, said they reflected the continued success of the group’s approach to the development of its brands, product portfolios, distribution and sales.

In South Africa, it is evident that Norman Adami is stepping down from his role as managing director of SAB on a high note. Revenue at SAB Beverages grew 10 percent to R20.7bn, with lager volumes up 1 percent and market share rising to almost 90 percent. Most significantly perhaps for Adami, who was at the helm in 2007 when Heineken terminated the Amstel licensing agreement, is that SAB has managed to claw back a substantial chunk of the market share Amstel enjoyed when it was licensed to SAB.

Analysts estimate that from a market share high of about 9 percent, Amstel has slumped to a share of just over 4 percent currently.

A major factor in that has been the strong growth of SAB’s major premium offering, Castle Lite. Adami said Castle Lite volumes had grown at 20 percent-plus a year for the past 30 months. SAB’s mainstream brands and power brands have also lifted volumes.

Adami said that SAB’s performance was particularly strong in the financial second quarter and pointed out that the first quarter, which did not have an Easter period, saw no growth in volumes.

“Four years into our business strategy, we are in an increasingly strong commercial position and are delivering steady, profitable and sustainable growth. We achieved the improved performance despite significant challenges, which included rising costs. I am proud of our achievements as a business,” Adami said.

SAB’s figures suffered the negative impact of a once-off adjustment for additional excise tax levied on certain of Distell’s products.

SAB’s share of the adjustment was R87m.

SAB paid out an interim dividend of R46m on its Zenzele empowerment deal, bringing the total paid since 2010 to R256m.

Commenting on the outlook for SABMiller, London-based Bernstein Research said that the group’s “diversified exposure to high-growth emerging markets, plus the Foster’s synergies and the contribution from its business capability programme, should drive a five-year earnings a share compound average growth rate of 14 percent”.

Ann Crotty thinks she still owns 300 SABMiller shares.