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Preliminary results F09: Resilient performance reflects operating strengths

14 May 2009

SABMiller plc, one of the world’s leading brewers with operations and distribution agreements across six continents, reports its preliminary (unaudited) results for the twelve months to 31 March 2009.

Operational Highlights

  • Lager volumes up 2%(1) to 210 million hectolitres (hl); organic lager volumes level with prior year despite weakened consumer demand; organic soft drinks volumes up 5%
  • Organic, constant currency group revenue growth of 9%, benefiting from strong pricing
  • EBITA(2) up 5%; reported EBITA unchanged, impacted by the strength of the US dollar
    - Latin America delivers 11% EBITA(2) growth despite slowing economies
    - Europe organic lager volumes level with prior year in either flat or declining markets; EBITA(2) down 5%
    - North America EBITA(2) up 22%; MillerCoors JV(3) cost synergies ahead of schedule
    - Africa and Asia EBITA(2) up 16%; Africa organic lager volumes up 5%; China’s Snow brand lager volumes up 19% to 60 million hl
    - South Africa lager volumes decline 2%; EBITA(2) down 8% on higher input costs
  • Group maintains sound balance sheet with moderate leverage

(1) Following the inception of the MillerCoors joint venture on 1 July 2008 the group has revised its volume definitions. Further details of these revised definitions can be found in the Financial review on page 15 of the announcement PDF.
(2) EBITA growth is shown on an organic, constant currency basis.
(3) The MillerCoors joint venture is included, at the group’s share, in EBITA and group revenue, but is not included in revenue.

Group revenue (a) 25,30223,8286
Revenue (b) (excludes associates’ and joint ventures’ revenue) 18,70321,410(13)
EBITA (c) 4,1294,141-
Adjusted profit before tax (d) 3,4053,639(6)
Profit before tax 2,9583,264(9)
Adjusted earnings (e) 2,0652,147(4)
Adjusted earnings per share (e)    
- US cents137.5143.1(4)
- UK pence 79.771.212
- SA cents 1,218.61,021.219
Basic earnings per share (US cents) 125.2134.9(7)
Dividends per share (US cents) 58.058.0-
  • (a) Group revenue includes the attributable share of associates’ and joint ventures’ revenue of US$6,599 million (i.e. including MillerCoors’ revenue) (2008: US$2,418 million).
  • (b) Revenue excludes the attributable share of associates’ and joint ventures’ revenue. Accordingly 2009 is not comparable with 2008 as MillerCoors’ revenue is not included in 2009 although Miller Brewing Company revenue is included in 2008.
  • (c) Note 2 provides a reconciliation of operating profit to EBITA which is defined as operating profit before exceptional items and amortisation of intangible assets (excluding software) but includes the group’s share of associates’ and joint ventures’ operating profit, on a similar basis. EBITA is used throughout this preliminary announcement.
  • (d) Adjusted profit before tax comprises EBITA less adjusted net finance costs of US$699 million (2008: US$491 million) and share of associates’ and joint ventures’ net finance costs of US$25 million (2008: US$11 million).
  • (e) A reconciliation of adjusted earnings to the statutory measure of profit attributable to equity shareholders is provided in note 6.

Meyer Kahn, Chairman of SABMiller, said:
"The group delivered robust results in the face of multiple challenges including higher commodity costs, an appreciating US dollar and weakening consumer spend.  Our performance in this difficult environment was driven by continued adherence to our strategic priorities and the power of our leading local brands which have been patiently built over many years.  Our medium to long term prospects remain promising because of our proven ability to grow the beer category and increase its share of total alcohol consumption in developing markets.”

Organic, constant currency
Latin America 1,1731011
Europe 944(1)(5)
North America 5812222
Africa and Asia6421316
South Africa: Beverages764(26)(8)
South Africa: Hotels and Gaming122(14)4

Business review

The group delivered resilient underlying results for the year against the difficult backdrop of the global economic downturn.  There was a slight rise in organic lager volumes in the first half, despite price increases, challenging comparatives and slowing growth across a number of markets.  Demand weakened in the second half, particularly in the last quarter, and organic lager volumes declined 1% as the effects of the financial crisis began to be felt more directly by consumers. 

Organic lager volumes for the full year were level with the prior year.  Many of our businesses achieved market share gains reflecting the strength of our brands and our local marketing and sales capabilities.  Aggregated beverage volumes were up 10% to 359 million hl with aggregated reported lager volumes up 11% to 292 million hl including acquisitions in Europe, Africa and Asia as well as the inclusion of 100% of volumes from MillerCoors.  A 9% increase in group revenue for the year on an organic, constant currency basis reflected stronger pricing in most of our markets. 

Effective revenue and cost management delivered organic, constant currency EBITA growth of 5% with better underlying performance in the second half as cost trends improved, particularly in Latin America, and the contribution from soft drinks strengthened.  However, on a reported basis, the second half results deteriorated year on year as a result of the significant weakening of our major operating currencies against the US dollar leaving reported EBITA of US$4,129 million flat for the full year.  EBITA margin declined 110 basis points (bps) on the prior year to 16.3% reflecting continued increases in input costs, despite robust pricing and initiatives to reduce fixed costs across the group.  During the second half of the year, the group has re-evaluated spending in light of the changing consumer environment and is selectively maintaining investment behind its brands and operations to support future growth.     

Despite EBITA being level with the prior year, adjusted earnings and adjusted earnings per share declined by 4% due to a significant increase in net finance costs which was partly offset by a lower effective tax rate of 30.2%.

Net debt at the year end was lower than at the prior year end, despite significant capital investment especially in the first half year.  The groups leverage remains at a healthy level compared to its sector, with gearing of 54.1%.  The Board has recommended a final dividend of 42.0 US cents per share, which will be paid to shareholders on 28 August 2009.  This brings the total dividend to 58.0 US cents, unchanged from the prior year.

  • Latin America achieved organic lager volume growth of 1%, with robust growth in Peru and Ecuador off-set by the impact of the economic slowdown in Colombia and Central America.  The region benefited from strong pricing, favourable mix and initiatives to reduce fixed costs which resulted in an improvement of 100 bps in EBITA margin.  Innovation to lift the appeal of the beer category continued, resulting in a rising share of beer within the alcohol market.  EBITA rose by 10% on a reported basis and by 11% on organic, constant currency basis.
  • Europe’s organic lager volumes were in line with last year as economic conditions deteriorated sharply in the second half putting pressure on consumer disposable income.  Against this background, the group achieved good market share gains in Poland, Romania and the UK, with positive momentum behind key brands.  Despite strong pricing, increased raw material and distribution costs reduced the EBITA margin.  Reported EBITA declined 1% and organic, constant currency EBITA declined 5%.
  • North America delivered EBITA growth of 22% for the year.  MillerCoors, the combined US and Puerto Rican operations of SABMiller and Molson Coors Brewing Company, created as a joint venture on 1 July 2008, enjoyed a very successful start despite challenging economic conditions.  Good progress has been made in the delivery of its US$500 million cost synergy plan, with first year synergies expected to be delivered ahead of schedule.  On a pro forma1 basis, domestic sales to wholesalers (STWs) were down 1.9% while sales to retailers (STRs) were down 0.4% for the nine months of MillerCoors’ operations.  Revenue remained strong, growing mid-single digits as MillerCoors sustained firm pricing and reduced price promotion.  The robust pricing, combined with accelerated cost synergies and marketing phasing, more than offset increased commodity costs to grow EBITA by 29% on a pro forma basis for the nine months of MillerCoors’ operations. 
  • In Africa the strategy to broaden our brand portfolio with premium and affordable offerings contributed to organic lager volume growth of 5%.  Tanzania delivered lager volume growth of 4% despite infrastructure challenges.  In Angola, both soft drinks and lager performed very well with organic growth of 29% and 17% respectively following significant investment in new capacity.  Mozambique’s lager volumes were marginally ahead of last year.    Botswana was adversely impacted by the introduction of a 30% levy on alcoholic beverages in November 2008, resulting in an 8% decline in lager volumes for the full year.  A significant capital expenditure programme continues in Africa, with four breweries scheduled to open in the current financial year. In Asia, the group’s China associate, CR Snow, acquired a further three breweries while growing lager volumes organically by 4%.  The Snow brand enjoyed growth of 19%, cementing its position as one of the largest beer brands in the world by volume.  India volumes grew 5% despite continued regulatory issues, particularly in the key market of Andhra Pradesh. 
  • In South Africa lager volumes were 2% down on the prior year, adversely affected by weaker consumer spending, the timing of Easter and constraints on sales of alcoholic beverages imposed in the Western Cape.  Revenue growth of 11% on a constant currency basis reflected strong pricing in both lager and soft drinks although this was not enough to offset markedly higher input costs, and EBITA margin declined.  We expanded our product portfolio with the launch of two premium lager brands and a premium dry apple ale and intensified marketing and sales initiatives.
  • During the year we continued to expand our global portfolio, completing the acquisition of brewing companies in the Ukraine, Russia and Nigeria as well as taking full ownership of our Vietnamese associate.  We also acquired water businesses in Ghana and Nigeria.  Water interests in Colombia and a soft drinks business in Bolivia were sold, realising a profit on disposal.
  • Following the global economic slowdown in the second half of the year, some of our operations in Latin America and Europe are being integrated and restructured resulting in charges of US$82 million for the year.  Restructuring in these regions is expected to provide pre tax benefits of approximately US$37 million per annum from our 2011 financial year.  In addition, integration and restructuring relating to MillerCoors has resulted in charges of US$61 million during the year. 
  • Net exceptional charges of US$69 million have been taken against profit before tax.  In addition to the restructuring charges outlined above, this includes US$526 million of profits on disposal of North American operations to the MillerCoors joint venture and the sale of two soft drinks businesses in Latin America.  As a result of the deterioration in economic and trading conditions in the Netherlands and the Ukraine, we have taken impairment charges of US$392 million against the carrying values of Grolsch and our Ukraine operation, although we remain confident in the strategic and long term potential of both of these businesses. 
  • On 13 May 2009, SABMiller plc entered into an agreement to acquire the outstanding 28.1% minority interest in its Polish subsidiary Kompania Piwowarska S.A. in exchange for the issue of 60 million ordinary shares of SABMiller plc.

1. MillerCoors pro forma figures are based on results for Miller and Coors’ US and Puerto Rico operations reported under International Financial Reporting Standards (IFRS) and US GAAP respectively for the nine months ended 31 March 2008.  Adjustments have been made to reflect both companies’ comparative data on a similar basis including amortisation of definite-life intangible assets, depreciation reflecting revisions to property, plant and equipment values and the exclusion of exceptional items.

The group delivered resilient underlying results, despite the strong headwinds that we faced. Global economic conditions and consumer demand weakened during the year and there remains little visibility as to the timing of any recovery. In the current year we expect commodity cost pressures to continue, given existing contractual arrangements. In addition, the currency translation effect of the stronger US dollar will impact our reported results.

However, the group remains confident in its medium term prospects. We are taking appropriate short-term mitigating actions in certain countries to reduce costs. Investment plans have been reviewed and curtailed where necessary in the light of expected economic conditions, but we continue to invest selectively to support growth. The group remains in a strong financial position, and we are confident that we will continue to benefit from the strength of our brands and our globally diversified and well balanced portfolio of businesses.

Download the full Preliminary F09 announcement PDF 0.74Mb

SABMiller plc Tel:   +44 20 7659 0100
Sue Clark Director of Corporate AffairsMob: +44 7850 285471
Gary Leibowitz Senior Vice President, Investor RelationsMob: +44 7717 428540
Nigel Fairbrass Head of Media RelationsMob: +44 7799 894265

A live webcast of the management presentation to analysts will begin at 9.30am (BST) on 14 May 2009.

This announcement, a copy of the slide presentation and video interviews with management are available on the SABMiller plc website at Video interviews with management can also be found at

High resolution images are available for the media to view and download free of charge from the image library within the news and media section of and at

Copies of the press release and detailed Preliminary Announcement are available from the Company Secretary at the Registered Office, or from 2 Jan Smuts Avenue, Johannesburg, South Africa.

Registered office: SABMiller House, Church Street West, Woking, Surrey GU21 6HS
Incorporated in England and Wales (Registration Number 3528416)

Telephone: +44 1483 264000

Facsimile: +44 1483 264117

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