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4-Traders Homepage  >  Shares  >  Euronext Amsterdam  >  HEINEKEN    HEIA   NL0000009165


Real-time Quote. Real-time Tradegate - 07/27 04:04:41 pm
70.875 EUR   -2.09%
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SABMiller Reports Fall in First-Quarter Lager Sales -- Update

07/23/2015 | 05:40am US/Eastern
By Ania Nussbaum 

LONDON-- SABMiller PLC, the world's No. 2 brewer, on Thursday reported a drop in first-quarter lager sales as a sluggish performance in Europe canceled out fizzier achievements in emerging markets.

The London-based beverage company that brews Peroni, Coors Light and Blue Moon reported that net producer revenue--group revenue less excise duties and similar taxes--rose 3% in the three months ended June 30. Total beverage volumes were level year-over-year, but beer volumes fell 1%. Both measures strip out the impact of recent acquisitions. The figures were released on Domenic De Lorenzo's first official day as the company's finance chief.

"Both revenue and volumes grew strongly in Latin America and Africa in the quarter, tempered in particular by a challenging quarter in our key European markets where the trading environment remains difficult and softer volumes in China," Chief Executive Alan Clark said in a statement.

In Europe, net producer revenue dropped 4%, contrasting with gains of 6% in Latin America and 7% in Africa.

Declines were particularly sharp in Poland, Slovakia and the Czech Republic. In Poland, revenue dropped 17% as a convenience-store chain stopped selling SAB's drinks and its beverages are facing low-price competitors.

SAB said it was affected by Easter, poor weather and recent IT deployment. In other European countries, revenue "grew by low single digits," and "weakness in lager volumes was predominantly driven by geopolitical uncertainty in Ukraine and a beer market decline in Russia, " the company said.

Despite "technical factors behind the weak volume performance in Europe, " SAB's poor results bode ill for rivals Heineken NV and Carlsberg A/S, Exane analyst François Mosnier wrote in a note. He said lower-than-expected results in Europe and China weren't a major source of concern when it comes to profitability.

In morning trading, shares of SAB were down 0.6%, while Carlsberg was down 0.9%, Heineken was down 0.5% and larger rival Anheuser-Busch InBev SA was down 0.2%.

SAB said volumes sold to U.S. retailers decreased by 3%, mainly affecting Keystone Light, Milwaukee's Best and Miller High Life.

The beer maker has profited recently from expansion in emerging markets, cashing in as the world's growing middle classes buy more beer. Unlike at AB InBev, often named as a potential acquirer, most of SAB's 200-plus brands are local brews with sales concentrated in just a few countries.

In Latin America, revenue grew by 6%. The region was the company's most profitable market in the fiscal year ended March 31. SAB's drinks were particularly popular in Colombia, partly thanks to dry weather, sports events and the launch of alcohol-free beer Aguila Cero.

SAB also showed strength in Africa, where revenue grew by 7% and volumes by 4%, as prices are increasing in the region and growth is driven by Nigeria and Mozambique.

In the Asia-Pacific region, volumes dropped by 3% while revenue increased 7%, reflecting disaffection for its beers in Australia and a volume decrease in China. In India, strong growth came partly due to lifted restrictions on alcohol sales during voting days.

After bolstering its nonalcoholic offerings with a range of malt drinks and a bottling tie-up with Coca-Cola Co., SAB is selling more soft drinks, with volumes up 4%. Nonalcoholic beverages made up around 20% of the company's volumes in the fiscal year ended March 31, up from 17% five years ago.

Ed Ballard contributed to this article.

Write to Ania Nussbaum at ania.nussbaum@wsj.com

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