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SABMiller Helps Ease Emerging-Market Concerns With Sales Gain

Published on Jan 21 2016 9:59 AM in Drinks tagged: SABMiller / AB Inbev

SABMiller Helps Ease Emerging-Market Concerns With Sales Gain

SABMiller showed that not all European consumer-goods companies are being stunted by a slowdown in emerging markets.

The brewer, in the process of being bought by AB InBev in the industry’s biggest acquisition, reported quarterly sales that beat estimates, with growth being driven by demand in Latin America and Africa.

Africa “performed well across the board,” according to Chief Executive Officer Alan Clark, while Latin America was boosted by the addition of more premium brands and price increases in Colombia. The performance will help ease concern over weakening emerging-market growth, after companies from food maker Nestle to distiller Diageo witnessed a slowdown over the past two years.

Investors are mainly focused on the takeover by AB InBev, which is due to be completed in the second half of 2016, Nik Oliver, an analyst at UBS Group, said in a note.

So-called organic lager volume advanced three per cent in the three months through December, the London-based maker of Pilsner Urquell and Castle lagers said in a statement. Analysts expected a 1.1 per cent gain, according to the median of estimates compiled by Bloomberg. The measure excludes the effect of acquisitions and currency shifts.

SABMiller last year doubled its goal for cost reductions to $1.05 billion by 2020 as it seeks to match the profit margins of its suitor. AB InBev later said it’s aiming for an additional $1.4 billion in annual savings as it combines the world’s biggest brewers. AB InBev plans to divest SAB’s Peroni and Grolsch brands in Europe, attracting the interest of companies such as Asahi Group Holdings Ltd.

Net producer revenue rose 7 per cent. Analysts expected a 5.5 per cent gain.

Revenue from sales in North America fell by one per cent, reflecting the weaker performance of MillerCoors, SABMiller’s joint venture with Molson Coors Brewing. AB InBev plans to sell SABMiller’s 58 percent stake to Molson Coors for $12 billion as it seeks to gain takeover approval from the U.S. Justice Department.

News by Bloomberg, edited by Hospitality Ireland

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