Global brewing giant SABMiller's
preliminary first-half results support our expectation that weakness in
consumer spending and trading down should contribute to a top-line
decline in fiscal 2010. Our fair value estimate remains in place.
Lager volume, on an internal basis, declined 1%. As we expected, Europe
remained a weak spot, with volume down 6%. The economies in Europe have
been especially hard hit, particularly in countries like Romania and
Russia, and we expect trading down to contribute to volume declines for
the full year. We were surprised to see a 1% decline in volume in Latin
America, as that region had remained quite resilient throughout the
global economic crisis, but Asia continued to post strong results with
volume up 9% (Snow grew 12% in China). MillerCoors volume sales to
retailers were down 1%; we expect trading down is to blame for this
trend as the value-priced brand Keystone Light grew double digits. The
firm's trading update for the first six months of its fiscal year
provided only a broad overview with very little commentary. We will
provide a more in-depth analysis when the firm releases full first-half
results November 19.
Read the full analyst note on SABMiller here.
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