Thread: Miller in the U.S. looked to be in terminal decline.

Miller in the U.S. looked to be in terminal decline. is buried in this new article! Hurray! Go Miller Boycott!

SABMiller beer volumes beat forecasts
Thu Oct 12, 2006 10:56 AM BST

By David Jones

LONDON (Reuters) - Global brewing giant SABMiller said on Thursday its first-half underlying beer volumes rose a higher-than-expected 9 percent but it suffered a slowdown in its biggest market, South Africa, and continued problems at Miller.

SABMiller (SAB.L: Quote, Profile, Research), the world's second biggest brewer, posted strong growth in Europe and Asia, especially Russia and China, but concerns elsewhere and the weakness of the South African rand against the dollar undermined its shares.

SABMiller stock lost early gains to stand off 0.6 percent at 10.29 pounds by 10:40 a.m. as analysts said the slowdown in high value United States and South African markets allied to growth in low value markets such as China would mean a fall in margins.


As a result of the concern over group profit margins, broker WestLB downgraded the stock to a "hold" from "add".

The London-based group, which brews Castle, Miller Lite and Peroni beers, issued the trading statement at the end of its first-half (April-Sept), saying its financial performance was in line with its own expectations.

Group beer volumes excluded South American brewer Bavaria which it purchased in October 2005.

Analysts were surprised by the strong 9 percent growth as most had expected a slowdown from the first-quarter's 7 percent rise due to tough trading at Miller and stiff comparisons with strong previous first-half figures from South Africa. The group's global volumes rose 5 percent in its year to March 2006.

"We have had a good start to the year particularly in Europe, Africa and Asia but we have two areas of concern in South Africa and Miller," group Chief Financial Officer Malcolm Wyman told a conference call.

Collins Stewart analyst Rob Mann said although Europe, Asia and South America looked very strong, second-quarter volumes were down in South Africa, the group's highest margin territory, while Miller in the U.S. looked to be in terminal decline.

"Trading in the round is very strong, 9 percent is best in class, but the group is beset by currency weakness," he said.

SABMiller makes over a third of its earnings in rand from beer and soft drinks and the South African currency has depreciated by 25 percent against the dollar so far this year.

In its South African beer business, which brews Carling, Hansa and Castle and earns 31 percent of profits, first-half volumes were up almost 1 percent after a 3 percent first-quarter rise and a 1 percent increase in the year to March 2006.


Wyman said South Africa had seen a slowdown and was a "little disappointing" coming at the bottom end of its 1 to 3 percent guidance due to tough comparisons and consumer demand for imported goods taking the steam out of beer buying.

In North America, where it brews Miller Genuine Draft and Milwaukee's Best, sales to retailers fell 3.6 percent after a first-quarter 2.4 percent fall and 1 percent dip the previous year, with Miller Lite volumes down marginally in the half-year. North America accounts for around 14 percent of group profit.

Wyman said the group was still suffering from price cuts made in August 2005 by U.S. industry leader Anheuser-Busch (BUD.N: Quote, Profile, Research), which Miller did not follow to protect its margins. It was "not comfortable" with the decline of its top brand Miller Lite.

In South America, where it bought Bavaria for $7.8 billion (4.2 billion pounds), beer volumes rose 11 percent after a first-quarter 9 percent rise. The region, which brews Aguila in Colombia and Cristal and Cusquena from Peru, earns 22 percent of group profit.

The brewer said its first-half volumes rose 8 percent in Europe, where it brews Pilsner Urquell, Tyskie and Ursus, after a 6 percent first-quarter rise and 5 percent in the previous year. Consumption was boosted during the summer's football world cup, while Russian volumes grew over 20 percent.

Its Africa and Asia region showed beer volumes up over 20 percent in the first half after a first-quarter rise of 19 percent and 17 percent the previous year, with strong growth of over 25 percent in China, where it brews Snow and Blue Sword.

SABMiller shares trade at 13.9 times 2007 forecast earnings, at a discount to rivals InBev (INTB.BR: Quote, Profile, Research) at 16.5, Heineken (HEIN.AS: Quote, Profile, Research) at 17.0 and Anheuser-Busch on 16.7 due to rand and other emerging market currencies concerns and also Miller.

SABMiller reports its half-year results on November . 9

http://today.reuters.co.uk

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Not that it was expected, but it sure would have been nice if some of the declines in America were contributed to the boycott.

Originally Posted by MW

Not that it was expected, but it sure would have been nice if some of the declines in America were contributed to the boycott.

OF course they dont want to do that....

Wyman said the group was still suffering from price cuts made in August 2005 by U.S. industry leader Anheuser-Busch (BUD.N: Quote, Profile, Research), which Miller did not follow to protect its margins. It was "not comfortable" with the decline of its top brand Miller Lite.

Yeah, I'm not going for that either.