The division enjoyed another excellent
year of profit growth with EBITA up 39%. Lager comparable volumes
grew 8% assisted by good summer weather in our two key markets of
Poland and the Czech Republic. Productivity (measured in hectolitres
per person per annum) improved by 12% and contributed to the 120
point expansion in EBITA margin. Currencies in central Europe have
strengthened against the US dollar, and this has contributed to
the improvement in reported results.
Growth in the Polish beer market was 5% for the twelve months to
March 2003. Kompania Piwowarska (KP) outperformed the industry with
a volume increase of 10%, reaching 32% market share. A new brand
Debowe, competing in the strong beer segment, had a highly successful
launch capturing over 20% of that segment within nine months. Recently,
we announced the acquisition of Browar Dojlidy Sp. z.o.o. for US$38
million. This acquisition was completed on 30 April 2003, after
securing all regulatory approvals and provides us with an economy
brand in the mainstream segment, adding a third production facility
and improving KP's representation in the east of the country.
In the Czech Republic, the Pilsner Urquell group exceeded expectations.
The overall market declined, as anticipated, by around 1% this past
year. However, we saw volumes grow by 4%, signalling good market
share gains. In particular, the premium Pilsner Urquell brand grew
by some 12%, assisting margin expansion. Local management is to
be commended on rapid reaction to, and recovery from, the devastating
floods in August.
Our international premium brand Pilsner Urquell continues to perform
well in the key export markets of the USA, Germany, and the United
Kingdom. Sales volumes in these markets are encouraging, with volumes
up 13%, 17% and 60% respectively on the prior year. In total, volumes
of Pilsner Urquell outside the Czech Republic have increased by
17% to 653,000 hls. The stand-alone Pilsner Urquell business in
the USA was integrated with the Miller Brewing Company operations
shortly after the financial year end and this will provide a strong
platform for the future potential of the brand in this market.
In Russia, industry volumes were up some 9% for the year and SABMiller
enjoyed a sharp recovery in the second half to end the year with
27% growth. This followed the introduction of cans, a new brand
Tri Bogatyrya launched into the growing mainstream segment, and
the newly licensed production of Kozel from our Czech brand portfolio.
MGD, Holsten and Pilsner Urquell volumes all more than doubled and
our share of the Russian premium segment is now over 10%. Expansion
to 3.5 million hectolitres at the Kaluga brewery is virtually
complete and well within budget.
In Hungary, general price stability continued, assisting overall
industry profitability. Our Dreher subsidiary's volumes were up
5% against the industry's 3% and profits and cash flow surged during
the year. Romania's beer market continues to disappoint with virtually
stagnant volumes. However, SABMiller's volumes grew organically
by 12% and this, together with ongoing synergy developments from
the prior year's Timisoreana acquisition, boosted Romania's profitability
albeit off a small base. Slovakia continues to benefit from management
and marketing integration with the Pilsner Urquell group. Volumes
were up 14% and our market share is now 25%. The Canary Islands
have suffered from the decline in global tourism and the beer industry
lost ground this past year; volumes were down by 3% though profits
Within Central and Eastern Europe, consolidation of the brewing
industry continues. SABMiller expects to maintain a leading position
in the region, and to continue competing effectively.