Currency causes full-year headaches for SABMiller

Megabrewer SABMiller reported a 10% drop in revenue for the year in its preliminary results on Wednesday to $19.8bn, though the company did claim 7% organic revenue growth at constant currencies in the year to 31 March.

The FTSE 100 firm, currently the subject of an acquisition and combination with AB InBev, posted group net producer revenue of $24.1bn, an 8% drop, or a 5% organic rise at constant currencies.

SABMiller’s total beverage volumes grew 2% during the year, with lager volumes up 1% and soft drinks volumes up 6%.

Reported EBITA dropped 9% to $5.8bn and grew 8% organically and at constant currencies, with adjusted earnings per share down 6% on a reported basis and up 12% on an organic basis to 224.1 cents.

SABMiller blamed the reported declines on the depreciation of “key operating currencies” against the US dollar.

There were exceptional charges of $721m, primarily related to the impairment of the firm’s investments in Angola and South Sudan, together with costs associated with the AB InBev transaction.

The company declared a final dividend of 93.75 cents, taking the full year dividend per share to 122 cents, up 8% on the prior year.

“These are good results,” said SABMiller chief executive Alan Clark in his comment on the results.

“We grew EBITA across all regions and our group EBITA margin improved through the year, on an underlying basis.

“This performance reflects our focus on driving superior growth by strengthening our core brands, expanding the beer category to reach more consumers on more occasions and placing an emphasis on premiumisation in all regions,” Clark added.

He said SABMiller’s affordability and premiumisation initiatives have allowed it to capture growth in developing markets and key trends in developed markets.

The company’s subsidiaries achieved volume and net producer revenue growth of 5% and 8% respectively, with a particularly good performance in a number of key markets.

“Premium lager brands NPR grew by 11%, while global lager brands NPR grew by 13% with growth across all regions.

“Our growth accelerated in the year, driven by improving momentum in Latin America, continued strong and well-balanced momentum in Africa and improvements in Australia and Europe in the second half,” Clark explained.

He said that in creating a more integrated global business, SABMiller has been able to cut costs and free up in-market resources to deliver on strategic objectives.

The board was continuing to focus on in-country performance in a cost-efficient manner, Clark said, supported by its global cost and efficiency programme which is ahead of schedule, and reportedly delivered cumulative net annualised savings of $47m by year end.

“The programme is on track to achieve our 2020 target of $1.05bn.

“These initiatives mitigated adverse transactional currency headwinds,” Clark explained.

The company was expanding its exposure to growing markets and building the “optimum portfolio” of lager, soft drinks and other alcoholic beverages to capture growth, he commented, with approval from the South African Competition Tribunal to form the continent’s largest soft drinks operation being granted in May.

"Achieving these results this year, notwithstanding economic and currency volatility and the distraction of the AB InBev offer, is a testament to the dedication and hard work of our people,” Clark concluded.