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Durban - On a macro level, which includes taking account of SABMiller's strong volume growth in previous years, the brewer's trading statement for the six months to end-September could be regarded as disappointing.
But that's really no surprise. It's well known what the economic downturn has done to consumer spending around the world, and in its last full-year results SABMiller clearly indicated that there had been a sharp downturn in demand and volumes in the last quarter (to end-March). The latest trading update is largely a continuation of that last quarter.
"It was always going to be pretty hard; the result's not great," said Dirk Kotzé, portfolio manager at Coronation Fund Managers. "But in the context of its brewing peers SABMiller is not doing that badly."
What Kotzé found encouraging is that in many regions SABMiller has been growing market share, in a declining market. "What also makes up for poor volumes is good price," he said.
SABMiller noted in the trading update that revenue has been supported by price increases taken in the prior year.
One region where it did lose marginal market share was South Africa, where lager volumes also dropped by 3%.
Cavan Osborne, portfolio manager at Old Mutual Investment Group SA, found the signs of gaining market share in most other regions encouraging.
"What we're seeing in this update is a flat first quarter and a 2% drop in the second quarter. I think the result is pretty much what was expected."
So while SABMiller is under pressure, it seems reasonably well placed for an economic upturn.
"This is the last quarter that SABMiller's hedging was in place (for raw materials like barley). So in the next quarter margins should start opening up, and maybe there will be higher volumes. From here going forward it's looking better," Kotzé said.
The share price on the JSE has shrugged off the trading statement, with SABMiller's price up 1.85% at 13:00 on Thursday while the market was down 0.34%.
That has been largely true for the past year, where the price has gained 27%.
- Fin24.com