Annual earnings rise 12 per cent at SABMiller

SABMILLER, THE world’s second-biggest brewer by volume, said it expected profit margins to show little change this year as savings programmes and price increases offset rising commodity prices.

The brewer of Grolsch and Peroni, which reported a 12 per cent increase in annual earnings before interest, taxes and amortisation yesterday, expects its Ebitda margin to remain “flattish” in the fiscal year ending March 2013,

Chief executive Graham Mackay said brewers including SABMiller faced rising prices for barley and sugar as well as lacklustre demand in the US and Europe, where economic turmoil is driving drinkers to cheaper beers.

The London-based company said it was counting on growth in Latin America and Africa, which buoyed earnings in the past fiscal year, to continue to drive growth.

The results showed that “the core regions of Latin America and South Africa are doing quite well”, said Gerard Rijk, an analyst at ING. “The focus will be, in my view, on Foster’s” and whether the company can continue to drive cost improvements.

SABMiller, which started selling beer to gold prospectors in South Africa in 1895, bought Australia’s Foster’s for about A$10.5 billion last year to further its expansion outside Europe and the US. The integration is proceeding well, it said yesterday.

SABMiller declined to comment on the prospects for the euro zone or the possibility of a Greek exit from the group, saying it’s less exposed than other consumer-goods companies and is “watching the situation carefully”. The company said it was taking steps, including ensuring it minimises exposure to the euro where possible.

Ebita rose to $5.63 billion in the year to March 31st, expanding in all regions except Europe, where consumers selecting cheaper beers in Romania and Poland hurt sales.

Organic Ebita rose 14 per cent in Latin America and 13 per cent in Africa.

The brewer selectively increased prices in Latin America last year, its biggest region, while also selling more beer there and in Africa. Annual beer volume rose 3 per cent in the period, excluding the effect of acquisitions and currency fluctuations.

Group revenue rose 11 per cent to $31.4 billion. – (Bloomberg)