SABMiller reports tough quarter as US approves AB InBev merger

Megabrewer SABMiller announced on Thursday that the US Department of Justice has given its clearance on the company’s proposed combination with AB InBev.

The FTSE 100 firm said that as part of the consent decree, AB InBev has agreed among other conditions to divest SABMiller’s US interest in MillerCoors to Molson Coors.

It said the divestiture, which was previously announced between AB InBev and Molson Coors, is conditional on the successful closing of the combination of AB InBev and SABMiller.

The merger has now received approval in 21 jurisdictions.

“In the remaining jurisdictions where regulatory clearance is still pending, AB InBev will continue to engage proactively with the relevant authorities to address their concerns in order to obtain the necessary clearances as quickly as possible,” the firm’s board said in a statement.

SABMiller also posted a trading update for the first quarter to 30 June, with group net producer revenue growing by 2% driven by price and mix realisation.

The company said beverage volumes and lager volumes were in line with the prior year, soft drinks volumes were up 2% and other alcoholic beverages were down 11%, driven by a decline in Africa.

Its subsidiaries were continuing to perform strongly, the board reported, with net producer revenue growth of 7% supported by beverage volume growth of 4%, with lager volumes up 5%.

Group net producer revenue, beverage volumes and lager volumes declined by 4%, 4% and 5% respectively a SABMiller’s associates and joint ventures, which it said reflected continued industry trends in the US and macroeconomic and trading headwinds in the major markets of its associated, particularly China, Angola and Turkey.

Premium lager brand net producer revenue grew 10%, supported by global lager brands which grew 5%, while soft drinks volumes improved 2%, with growth in Africa and Europe offset by a decline in Latin America.

On a reported basis, SABMiller’s group net producer revenue declined by 4% due to the adverse translational impact of its key operating currencies against the US dollar.

“This was another quarter of good underlying momentum for our subsidiaries with continued delivery of our strategic priorities, in particular Europe, South Africa, Colombia, Peru and Australia delivered good growth,” said chief executive Alan Clark.

“Our performance was tempered by a more challenging quarter in some markets in the rest of Africa, where volume was negatively impacted by economic volatility and challenging trading conditions.

“We also continued to face trading headwinds in our associates' and joint ventures' key markets such as China, Angola and the USA,” Clark added.