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Chairman's statement

From our South African origins, we’ve risen to the top league of the international brewing industry by the planned and careful process we outlined five years ago. The result is a spread of operations, well balanced between fast-growing developing markets and cash-generating developed markets.

Dear Shareholder

I am delighted to report that the financial year to 31 March 2004 has been an outstanding one for your company. Turnover increased by some 41% while adjusted earnings per share were up by 44%. Pleasingly, for the first time, our adjusted earnings per share showed an increase in all our major currencies. In view of this performance, the board has recommended an increase in the final dividend to bring the total for the year to 30 US cents, a 20% increase. The dividend, which is covered 2.6 times by adjusted earnings, is at a level that we believe should grow over time in line with the trend of any increase in earnings.

Net cash flow generated in the year totalled US$2,292 million from operating activities. The balance sheet remains strong with gearing at 43.3% – this after US$576 million of capital expenditure, of which 33% was in new capacity and 67% in maintenance expenditure. During the year we launched a successful US$2,000 million debt offering.

It is particularly gratifying that all our businesses did well. In the US, results from Miller Brewing Company – acquired in 2002 – have answered many people’s scepticism about our ability to restore the business to financial health. The turnaround programmes now in place are already having an effect on performance, though I should point out that we’re still in the early stages and much remains to be done. Our Central American operation delivered higher earnings, thanks to the actions we’ve taken to improve its brand portfolio and enhance its efficiency. There were strong results from South Africa in both beer and soft drinks, helped by the rise of the rand against the dollar. The rest of Africa produced an impressive performance and we again saw good growth in Europe with Russia doing particularly well.

Meanwhile, we’ve continued to strengthen our position in new, emerging markets by acquiring further operations in China and by forming a joint venture in India with Shaw Wallace breweries. Also during the year, we’ve developed our European portfolio with the acquisition of Birra Peroni in Italy and gained entry to Morocco and Algeria through our joint venture with Castel.

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