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United Kingdom, London: The world's third-largest brewer, SABMiller Plc, beat forecasts with a 28 % rise in half-year profits on the back of a turnaround at U.S. arm Miller and said it had plenty of firepower for any future big deals. The brewer of Miller Lite, Castle and Nastro reported the first rise in Miller's U.S. market share in years as its turnaround strategy reached mid-point, while a strong rand boosted already buoyant South African profits, Reuters revealed on November 18.

The London-based company said on Thursday, November 18, it will look at any big deals brewing in the sector that may emerge in the future and that it had the ability to raise up to $2.5 billion in debt before needing to resort to potential equity issues. Chief Executive Graham Mackay said the company was set to see further underlying beer volume growth in its second half after a 5 percent rise in the first half with a strong performance from most areas across the world, except for Italy. "For the second half, although we see higher energy, commodity and marketing costs, we are still well placed to see further organic beer volumes increases," Mackay said.

The brewer, ranked third in the world after Belgium's InBev and Anheuser-Busch, posted earnings before interest, tax and amortisation (EBITA) for the six months to Sept. 30 of $1.141 billion, well ahead of analyst forecasts of $1.013 billion to $1.081 billion. "These were strong results across the board and the run up in the shares which has been largely on the back of a strong rand will now be based on the fundamental strengths of the business," said analyst Michael Bleakley at CSFB.

SABMiller shares ended up 2.7 percent at 870 pence after hitting a new record high of 889-1/2p. It has outperformed the index by 36 percent and rival Scottish and Newcastle by 30 % this year. The shares have risen nearly 50 percent from 570p at the start of 2004 on the back of the rand, which has appreciated by nearly 40 percent against the dollar since the Miller deal, and strong performances by most of its businesses around the world.

SABMiller broker Cazenove upgraded its forecasts and said at a share price of 880p SABMiller's price earnings multiple for 2004/2005 at 15.6 times is five per above other European brewers but still nine percent below its closest peer InBev. The broker pushed its earnings forecast up by 4 percent to 94 cents from 90.3 for 2004/2005, and to 103.1 cents from 99.6 for the following year.

The brewer of Pilsner Urquell, Peroni and Tyskie beers said it could raise $1.5-2.5 billion without tapping equity market, but analysts said many big groups still had family or private part owners, like Heineken and Carlsberg. "We will look at big acquisitions on merit. We will not be excluded from any transactions, but so much is owned by privately owned groups," Mackay said.

SABMiller has been on the acquisition trail since moving to London in 1999, buying No 2 U.S. brewer Miller in 2002 in a $5.6 billion deal, and last year snapped up Italy's Peroni. It has been linked with many deals such as breaking into a planned merger between Canada's Molson Inc. and U.S. rival Adolph Coors Co., or a bid for Scottish and Newcastle.

SABMiller, known as South African Breweries before it bought Miller from Altria, said Miller's market share rose above 18 percent as volumes increased 2.3 percent in a sluggish U.S. beer market as it fought off the mighty Anheuser, which controls half the U.S. beer market.

Miller Lite, which makes two thirds of Miller profits, has been boosted by the popularity of low-carb Atkins diets but Mackay now expects other of the group's Miller brands to improve as Miller Lite's relative growth slows.

Its South African beer operations saw profits up 35 percent with volume 3 percent ahead, while in Italy beer volumes fell 12 percent in a market off 7 percent due to cool summer weather and disruptions due to restructuring at Peroni. SABMiller said half-year earnings per share rose 38 percent to 48.8 U.S. cents, ahead of forecasts of 43.4 to 45.5 cents, while its half-year dividend was raised 60 % to 12.0 cents a share as it rebalances its interim and final pay-outs.


21 November, 2004