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SABMiller F09 Preliminary AnnouncementLONDON, May 14 /PRNewswire/ -- SABMiller plc, one of the world's leading brewers with operations and distribution agreements across six continents, reports its preliminary (unaudited) results for the twelve months to 31 March 2009.
Operational Highlights
- Lager volumes up 2%(1) to 210 million hectolitres (hl); organic lager
volumes level with prior year despite weakened consumer demand; organic
soft drinks volumes up 5%
- Organic, constant currency group revenue growth of 9%, benefiting from
strong pricing
- EBITA(2) up 5%; reported EBITA unchanged, impacted by the strength of
the US dollar
- Latin America delivers 11% EBITA(2) growth despite slowing economies
- Europe organic lager volumes level with prior year in either flat or
declining markets; EBITA(2) down 5%
- North America EBITA(2) up 22%; MillerCoors JV(3) cost synergies ahead
of schedule
- Africa and Asia EBITA(2) up 16%; Africa organic lager volumes up 5%;
China's Snow brand lager volumes up 19% to 60 million hl
- South Africa lager volumes decline 2%; EBITA(2) down 8% on higher
input costs
- Group maintains sound balance sheet with moderate leverage
(1) Following the inception of the MillerCoors joint venture on 1 July 2008 the group has revised its volume definitions. Further details of these revised definitions can be found in the Financial review on page 15. (2) EBITA growth is shown on an organic, constant currency basis. (3) The MillerCoors joint venture is included, at the group's share, in EBITA and group revenue, but is not included in revenue.
2009 US$m 2008 US$m %
change
Group revenue (a) 25,302 23,828 6
Revenue (b) (excludes associates'
and joint ventures' revenue) 18,703 21,410 (13)
EBITA (c) 4,129 4,141 -
Adjusted profit before tax (d) 3,405 3,639 (6)
Profit before tax 2,958 3,264 (9)
Adjusted earnings (e) 2,065 2,147 (4)
Adjusted earnings per share (e)
- US cents 137.5 143.1 (4)
- UK pence 79.7 71.2 12
- SA cents 1,218.6 1,021.2 19
Basic earnings per share (US cents) 125.2 134.9 (7)
Dividends per share (US cents) 58.0 58.0 -
(a) Group revenue includes the attributable share of associates' and
joint ventures' revenue of US$6,599 million (i.e. including MillerCoors'
revenue) (2008: US$2,418 million).
(b) Revenue excludes the attributable share of associates' and joint
ventures' revenue. Accordingly 2009 is not comparable with 2008 as
MillerCoors' revenue is not included in 2009 although Miller Brewing
Company revenue is included in 2008.
(c) Note 2 provides a reconciliation of operating profit to EBITA which
is defined as operating profit before exceptional items and amortisation
of intangible assets (excluding software) but includes the group's share
of associates' and joint ventures' operating profit, on a similar basis.
EBITA is used throughout this preliminary announcement.
(d) Adjusted profit before tax comprises EBITA less adjusted net finance
costs of US$699 million (2008: US$491 million) and share of associates'
and joint ventures' net finance costs of US$25 million (2008: US$11
million).
(e) A reconciliation of adjusted earnings to the statutory measure of
profit attributable to equity shareholders is provided in note 6.
CHIEF EXECUTIVE’S REVIEW Meyer Kahn, Chairman of SABMiller, said: "The group delivered robust results in the face of multiple challenges including higher commodity costs, an appreciating US dollar and weakening consumer spend. Our performance in this difficult environment was driven by continued adherence to our strategic priorities and the power of our leading local brands which have been patiently built over many years. Our medium to long term prospects remain promising because of our proven ability to grow the beer category and increase its share of total alcohol consumption in developing markets."
Organic,
constant
2009 Reported currency
EBITA growth growth
US$m % %
Latin America 1,173 10 11
Europe 944 (1) (5)
North America 581 22 22
Africa and Asia 642 13 16
South Africa: Beverages 764 (26) (8)
South Africa: Hotels and 122 (14) 4
Gaming
Corporate (97) - -
Group 4,129 - 5
Business review The group delivered resilient underlying results for the year against the difficult backdrop of the global economic downturn. There was a slight rise in organic lager volumes in the first half, despite price increases, challenging comparatives and slowing growth across a number of markets. Demand weakened in the second half, particularly in the last quarter, and organic lager volumes declined 1% as the effects of the financial crisis began to be felt more directly by consumers. Organic lager volumes for the full year were level with the prior year. Many of our businesses achieved market share gains reflecting the strength of our brands and our local marketing and sales capabilities. Aggregated beverage volumes were up 10% to 359 million hl with aggregated reported lager volumes up 11% to 292 million hl including acquisitions in Europe, Africa and Asia as well as the inclusion of 100% of volumes from MillerCoors. A 9% increase in group revenue for the year on an organic, constant currency basis reflected stronger pricing in most of our markets. Effective revenue and cost management delivered organic, constant currency EBITA growth of 5% with better underlying performance in the second half as cost trends improved, particularly in Latin America, and the contribution from soft drinks strengthened. However, on a reported basis, the second half results deteriorated year on year as a result of the significant weakening of our major operating currencies against the US dollar leaving reported EBITA of US$4,129 million flat for the full year. EBITA margin declined 110 basis points (bps) on the prior year to 16.3% reflecting continued increases in input costs, despite robust pricing and initiatives to reduce fixed costs across the group. During the second half of the year, the group has re-evaluated spending in light of the changing consumer environment and is selectively maintaining investment behind its brands and operations to support future growth. Despite EBITA being level with the prior year, adjusted earnings and adjusted earnings per share declined by 4% due to a significant increase in net finance costs which was partly offset by a lower effective tax rate of 30.2%. Net debt at the year end was lower than at the prior year end, despite significant capital investment especially in the first half year. The groups leverage remains at a healthy level compared to its sector, with gearing of 54.1%. The Board has recommended a final dividend of 42.0 US cents per share, which will be paid to shareholders on 28 August 2009. This brings the total dividend to 58.0 US cents, unchanged from the prior year.
- Latin America achieved organic lager volume growth of 1%, with robust
growth in Peru and Ecuador off-set by the impact of the economic
slowdown in Colombia and Central America. The region benefited from
strong pricing, favourable mix and initiatives to reduce fixed costs
which resulted in an improvement of 100 bps in EBITA margin. Innovation
to lift the appeal of the beer category continued, resulting in a
rising share of beer within the alcohol market. EBITA rose by 10% on a
reported basis and by 11% on organic, constant currency basis.
- Europe's organic lager volumes were in line with last year as economic
conditions deteriorated sharply in the second half putting pressure on
consumer disposable income. Against this background, the group achieved
good market share gains in Poland, Romania and the UK, with positive
momentum behind key brands. Despite strong pricing, increased raw
material and distribution costs reduced the EBITA margin. Reported
EBITA declined 1% and organic, constant currency EBITA declined 5%.
- North America delivered EBITA growth of 22% for the year. MillerCoors,
the combined US and Puerto Rican operations of SABMiller and Molson
Coors Brewing Company, created as a joint venture on 1 July 2008,
enjoyed a very successful start despite challenging economic
conditions. Good progress has been made in the delivery of its US$500
million cost synergy plan, with first year synergies expected to be
delivered ahead of schedule. On a pro forma1 basis, domestic sales to
wholesalers (STWs) were down 1.9% while sales to retailers (STRs) were
down 0.4% for the nine months of MillerCoors' operations. Revenue
remained strong, growing mid-single digits as MillerCoors sustained
firm pricing and reduced price promotion. The robust pricing, combined
with accelerated cost synergies and marketing phasing, more than offset
increased commodity costs to grow EBITA by 29% on a pro forma basis
for the nine months of MillerCoors' operations.
- In Africa the strategy to broaden our brand portfolio with premium and
affordable offerings contributed to organic lager volume growth of 5%.
Tanzania delivered lager volume growth of 4% despite infrastructure
challenges. In Angola, both soft drinks and lager performed very well
with organic growth of 29% and 17% respectively following significant
investment in new capacity. Mozambique's lager volumes were marginally
ahead of last year. Botswana was adversely impacted by the introduction
of a 30% levy on alcoholic beverages in November 2008, resulting in an
8% decline in lager volumes for the full year. A significant capital
expenditure programme continues in Africa, with four breweries
scheduled to open in the current financial year. In Asia, the group's
China associate, CR Snow, acquired a further three breweries while
growing lager volumes organically by 4%. The Snow brand enjoyed growth
of 19%, cementing its position as one of the largest beer brands in the
world by volume. India volumes grew 5% despite continued regulatory
issues, particularly in the key market of Andhra Pradesh.
- In South Africa lager volumes were 2% down on the prior year, adversely
affected by weaker consumer spending, the timing of Easter and
constraints on sales of alcoholic beverages imposed in the Western
Cape. Revenue growth of 11% on a constant currency basis reflected
strong pricing in both lager and soft drinks although this was not
enough to offset markedly higher input costs, and EBITA margin
declined. We expanded our product portfolio with the launch of two
premium lager brands and a premium dry apple ale and intensified
marketing and sales initiatives.
- During the year we continued to expand our global portfolio, completing
the acquisition of brewing companies in the Ukraine, Russia and Nigeria
as well as taking full ownership of our Vietnamese associate. We also
acquired water businesses in Ghana and Nigeria. Water interests in
Colombia and a soft drinks business in Bolivia were sold, realising a
profit on disposal.
[1] MillerCoors pro forma figures are based on results for Miller and Coors' US and Puerto Rico operations reported under International Financial Reporting Standards (IFRS) and US GAAP respectively for the nine months ended 31 March 2008. Adjustments have been made to reflect both companies' comparative data on a similar basis including amortisation of definite-life intangible assets, depreciation reflecting revisions to property, plant and equipment values and the exclusion of exceptional items.
- Following the global economic slowdown in the second half of the year,
some of our operations in Latin America and Europe are being integrated
and restructured resulting in charges of US$82 million for the year.
Restructuring in these regions is expected to provide pre tax benefits
of approximately US$37 million per annum from our 2011 financial year.
In addition, integration and restructuring relating to MillerCoors has
resulted in charges of US$61 million during the year.
- Net exceptional charges of US$69 million have been taken against profit
before tax. In addition to the restructuring charges outlined above,
this includes US$526 million of profits on disposal of North American
operations to the MillerCoors joint venture and the sale of two soft
drinks businesses in Latin America. As a result of the deterioration in
economic and trading conditions in the Netherlands and the Ukraine, we
have taken impairment charges of US$392 million against the carrying
values of Grolsch and our Ukraine operation, although we remain
confident in the strategic and long term potential of both of these
businesses.
- On 13 May 2009, SABMiller plc entered into an agreement to acquire the
outstanding 28.1% minority interest in its Polish subsidiary Kompania
Piwowarska S.A. in exchange for the issue of 60 million ordinary shares
of SABMiller plc.
Outlook The group delivered resilient underlying results, despite the strong headwinds that we faced. Global economic conditions and consumer demand weakened during the year and there remains little visibility as to the timing of any recovery. In the current year we expect commodity cost pressures to continue, given existing contractual arrangements. In addition, the currency translation effect of the stronger US dollar will impact our reported results. However, the group remains confident in its medium term prospects. We are taking appropriate short-term mitigating actions in certain countries to reduce costs. Investment plans have been reviewed and curtailed where necessary in the light of expected economic conditions, but we continue to invest selectively to support growth. The group remains in a strong financial position, and we are confident that we will continue to benefit from the strength of our brands and our globally diversified and well balanced portfolio of businesses.
Enquiries:
SABMiller plc Tel: +44-20-7659-0100
Sue Clark Director of Corporate Affairs Mob: +44-7850-285471
Gary Leibowitz Senior Vice President, Investor
Relations Mob: +44-7717-428540
Nigel Fairbrass Head of Media Relations Mob: +44-7799-894265
A live webcast of the management presentation to analysts will begin
at 9.30am (BST) on 14 May 2009.
This announcement, a copy of the slide presentation and video
interviews with management are available on the SABMiller
plc website at http://www.sabmiller.com . Video interviews with
management can also be found at http://www.cantos.com.
High resolution images are available for the media to view and
download free of charge from the image library within the News and
media section of http://www.newscast.co.uk .
Copies of the press release and detailed Preliminary Announcement
are available from the Company Secretary at the Registered Office,
or from 2 Jan Smuts Avenue, Johannesburg, South Africa.
Registered office: SABMiller House, Church Street West, Woking,
Surrey GU21 6HS
Incorporated in England and Wales (Registration Number 3528416)
Telephone: +44-1483-264000
Facsimile: +44-1483-264117
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