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Africa ops to lift SABMiller, say experts

Harare - Lager volumes for global brewer SABMiller's Africa operations could have risen by 3.2% during the half-year period to end-September, analysts at Renaissance Capital said on Wednesday.

SABMiller [JSE:SAB] will present its trading update for the second quarter to end-September on Wednesday next week. The update is expected to reflect stronger volume growth for the first half-year period in its rest of Africa operations, said the analysts.

Growth in the Africa operations is expected to have been driven by double-digit growth in markets such as Nigeria as well as enhanced capacity expansion and improved volumes in Tanzania, Mozambique and Uganda, said Renaissance Capital in its report on SABMiller.

However, weaker trends are likely to be reported for South Africa and Latin America. This is largely seen offsetting gains in other markets such as Asia and Europe.

In SABMiller's other Africa operations, Zimbabwe has been experiencing a slowdown in economic trends which resulted in deflation and subdued demand for most commodities. Zimbabwe’s economy is expected to grow by 3.1% this year.

This has forced a shift in beer consumption trends in the country, other experts have previously said. It could also result in stunted revenue growth for SABMiller’s associate unit in the country, Delta Corporation.

"Zambia could still be a substantial drag on volumes due to the January excise tax increase," said the report.

Other experts said SABMiller’s Africa volumes may be further propped up by surging sales volumes of its Chibuku opaque beer product aimed for the lower end of the African market.

SABMiller is likely to report 2.9% in organic volume growth for the half-year period, broadly mirroring trends in the first quarter. A net producer revenue increase of 6% has also been predicted for the period.

In South Africa, SABMiller volumes have been projected to rise by a nominal 1% as they are expected to have been negatively affected by last year’s trade loading.

In Asia, volumes could rise by 2.6% on a year-on-year (y/y) basis, with lager consumption in China seen rising by 4% although Australian numbers are expected to have fallen by 3% because of rising competition and cold weather conditions.

The Renaissance Capital analysts said they believe reported revenue growth would likely be lower at about 2% y/y due to "adverse FX and disposals".

SABMiller CEO Alan Clark said this week that the global brewer would continue to be assertive and search for growth, a few weeks after Heineken rejected its buyout offer.

READ: SABMiller takeover talk lifts JSE

He said the company would continue to capitalise on growth opportunities and prop up its products to raise competitiveness.

 - Fin24

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