SABMiller finishes quarter 7% higher, but lower for full year on weak demand, currency headwinds

SABMiller, the brewer in the midst of being acquired by its bigger rival, Anheuser-Busch InBev (AB InBev), said it sold 4% more lagers in the first three months of 2016 than it did in the same period a year ago.

The maker of Miller Lite, Castle Lager, Hero, among others said its revenue rose 7% in the quarter ended March 31 with volume rising 4%.

“We have had a strong year and increased momentum in the second-half across all our regions notwithstanding economic volatility and the potential distraction of the AB InBev offer,” CEO Alan Clark said in a statement.

The company did not provide any additional information on its pending acquisition by AB InBev, which is expected to close in the second-half of the year.

The deal moved a step closer last week when AB InBev agreed concessions made by the South African Competition Commission which was seen as one of the biggest hurdles the firm faced in its pending transaction.

SABMiller reported stronger sales in Latin America and Africa which helped lift sales and offset weaker revenue in North America and Europe, where consumers are drinking less of mainstream beer that SABMiller and other large brewers make.

In Latin America, the brewer was helped by a 5% volume lift with fourth quarter sales rising to 8% and 8% rise for the full year.

The company reported a 5% rise in Lager volumes in Africa in the 12-month period, with soft drinks helping lift sales by 8%. The brewer performed well in its home base of South Africa, with sales rising 10%. And with all the gloomy economic news in Nigeria, the country became the bright light for the brewer, with sales rising 31% on a 27% volume lift. The company noted that an expanded and increased capacity and enhanced market execution helped the brewer return strong results in the country. Sales in Africa rose 12% for the quarter and 11% for the full year.

SABMiller said that Asia Group volumes fell by 1% for the full year 2016.While sales rose 4% in Australia, the brewer struggled with its mainstream Victoria Bitter and Carlton Draught brands.  The company saw a 4% rise in Q4 sales and 3% rise for the full year 2015/2016.

European volumes were flat with Lager falling 1% and soft drinks rising 2%. While sales fell in Poland by 9% as the company faced strong competition from Heineken’s H1, there were some bright lights. Sales rose 5% in the UK with 3% rise in volumes. Italy and Romania also saw volume growth in the second-half due to good weather. However, Russia remained a struggle for SABMiller due to economic headwinds. Europe saw a 3% rise in sales for the quarter and 2% rise for the full year.

In North America, it was all struggles for the brewer as Q4 sales went into the negative, (-3%) and full-year results were flat. The company said that Premium Light sales fell in the year, with Coors Light sales falling into the low single digits. Miller Lite was also flat. However sales in above-premium brands rose marginally due to the launch of Henry’s Hard Soda in Q4.  The company was also helped by the Redd’s brand which lifted sales by high single-digits, although volumes fell in the fourth quarter.

The company said that its fourth quarter revenue fell 4% due to a stronger dollar, which impacted sales in other markets outside the United States.

Reported revenue for the year fell 8%. If the impact of weak currencies were excluded, it would have finished higher at 5% for the year.

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