SABMiller H1 points to top-line decline in 2010

MORNINGSTAR VIEW: Preliminary first-half points to top-line decline in the full year but we still see long-term growth

Ann Gilpin | 16-10-09 | E-mail Article

Global brewing giant SABMiller's preliminary first-half results support our expectation that weakness in consumer spending and trading down should contribute to a top-line decline in fiscal 2010. Our fair value estimate remains in place.

Lager volume, on an internal basis, declined 1%. As we expected, Europe remained a weak spot, with volume down 6%. The economies in Europe have been especially hard hit, particularly in countries like Romania and Russia, and we expect trading down to contribute to volume declines for the full year. We were surprised to see a 1% decline in volume in Latin America, as that region had remained quite resilient throughout the global economic crisis, but Asia continued to post strong results with volume up 9% (Snow grew 12% in China). MillerCoors volume sales to retailers were down 1%; we expect trading down is to blame for this trend as the value-priced brand Keystone Light grew double digits. The firm's trading update for the first six months of its fiscal year provided only a broad overview with very little commentary. We will provide a more in-depth analysis when the firm releases full first-half results November 19.

Read the full analyst note on SABMiller here.

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