Africa and Asia
|EBITA margin (%)*
|Sales volumes (hls 000s)**
|- Lager comparable
|- Carbonated soft drinks (CSDs)
|- Other beverages
Our portfolio of businesses in Africa combined with our Castel alliance diversifies country risk across the continent and the benefits of this can be seen in the fiscal 2004 results. Overall, our African businesses continued the solid performance reported at the half year, delivering strong results for the full year. Lager volume growth was recorded in Uganda, Ghana, Tanzania, Zambia and Swaziland, but this was more than offset by a modest decline in Botswana and a significant reduction in Zimbabwe where the depressed economy impacted sales. A similar pattern was evident in carbonated soft drinks, where exceptionally strong volume gains in Angola were also offset principally by steep declines in Zimbabwe.
Lager brand growth was 2%, and across the continent there have been a number of successful brand rejuvenation projects, particularly Safari in Tanzania, Laurentina in Mozambique and Nile and Club in Uganda.
Our African business delivered a strong pre-exceptional EBITA performance reflecting volume developments in key markets, improved productivity and operating performance and currency strength principally in Botswana, Lesotho and Swaziland. In addition, the group recorded market share gains in Uganda and Ghana, the former including the benefits of new product development. We continue to benefit from last year’s East African consolidation in Tanzania and Kenya, and Angola is proving to be an exciting market with strong growth in our CSD business as the economy normalises after years of civil war. Botswana delivered strong earnings growth despite the marginal drop in volumes following the introduction of VAT.
Our alliance partner, Castel, enjoyed an excellent year with strong organic growth in its key markets of Cameroon, Ivory Coast and Gabon, augmented by a number of strategic acquisitions and currency strength. We recently announced our 40% participation in joint ventures in Algeria and Morocco.
The Chinese beer market is estimated to be the biggest in the world by volume, with CRB enjoying the number two position in the market.
Our Chinese associate, China Resources Breweries, Ltd (CRB), performed well, recovering from the SARS epidemic at the beginning of the year to record 7.5% lager volume growth for the year, of which 5% was organic. The Chinese beer market is estimated to be the biggest in the world by volume, with CRB enjoying the number two position in the market. The development of a national brand remains a key focus area in the business, with the Snow brand achieving volumes of 7 million hectolitres during the current year. The volume growth during the year contributed to an increase in EBITA.
In March 2004, CRB announced that it had entered into a conditional agreement with the majority shareholder of Zhejiang Qianpi Group Company Ltd (Qianjiang), the largest brewery in Zhejiang Province, to co-operate to reorganise Qianjiang and establish a joint venture company, whereby CRB will have a 70% equity interest in the company and the shareholders of Qianjiang will have the remaining 30% interest. Further, in May 2004 CRB announced that it had acquired a 90% interest in two breweries in Anhui Province. The two breweries in Shucheng and Liuan produce the Longjin brand.
In June 2003 we announced the acquisition of a 29.6% stake in Harbin Brewery Group Ltd (Harbin), which we have accounted for as a fixed asset investment for the period of the ownership. We have recently announced our intention to sell this interest into an offer being made for the shares of Harbin, at a substantial profit.
In India, we announced the formation of a 50:50 joint venture with the Shaw Wallace group to achieve a strong number two position in this populous country’s developing beer industry.
The operational integration of our businesses has been completed ahead of expectation and we have a solid foundation to capture ongoing volume growth as the beer industry develops. Certain conditions are in the process of being completed, and until the transaction becomes unconditional the business will be accounted for as a fixed asset investment.
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