African Operations Bolster SABMiller’s Profits

WORLD No.2 brewer, SABMiller, on Thursday said volume growth in Ghana, Tanzania, Zambia and Nigeria had bolstered the firm’s profits for the six months to September this year.The brewer said the outperforming African operations assisted the firm in counterbalancing the falling beer profits in North America and the Eurozone area.

Alan Clark, the CEO of SABMiller, said during the period under review the brewer had assessed the potential of its businesses in the developed and the developing markets.

He made this comment against the backdrop of collapsing profits in developed markets like the Eurozone and North America, which were suffering because of the weakness of key currencies against the US Dollar.

The company said this state of affairs would continue to negatively affect the company’s profits unless those currencies recover against the US Dollar.

It said raw material unit input costs were expected to rise in low to mid-single digits in constant currency terms, affecting the industry in the meantime.

SABMiller said African operations’ EBITDA surged 15 percent from $355 million to $408 million in the six months to September this year.

Group EBITDA surged 7 percent to $3.27 billion during the period under review. This was head of analysts’ estimates of $3.22 billion, according to Reuters.

Jamie Wilson, the CFO at SABMiller, said the troubled Eurozone was trading less than expected.

He said the brewer was surprised by the fact that the economies in the Eurozone area continued to underperform.

Additionally, in South Africa, beverages were negatively affected by the serious weakness of the South African Rand against a basket of currencies, including the US dollar.

This saw lager volumes increasing marginally by 3 percent in South Africa.

Castle Lite and Castle Milk Stout performed well in the premium segment in South Africa.

However, James Wilmore, an analyst at just-drinks, a beverage industry site, said the South African problems were short term. According to him, South Africa and Colombia remained well-placed for structural long term growth.