E-Malt.com News article: 2668

The world's second-biggest brewer SABMiller Plc, in a takeover fight for China's Harbin Brewery, reported a 49 % jump in annual core profit on May 20 and said its Miller turnaround was gaining speed. The London-based maker of Miller Lite, Castle and Peroni beers said its revival of U.S. brewer Miller was on track and showing momentum, with annual volumes to end-March down 0.8 % after second-half volumes rose 5.3 %. Shares in the brewer rose 3.9 % to 645 pence in early trading -- the biggest gainer among FTSE 100 stocks -- as the results beat forecasts, according to Reuters.

SABMiller, known as South African Breweries before it bought Miller from Altria in 2002, said its top brand Miller Lite had grown since early July and shown double-digit percentage growth in the last six months. Other Miller brands were also improving. Miller Lite accounts for two-thirds of Miller profits and has been boosted by the popularity of the low-carbohydrate Atkins diet in the U.S. -- as have rival beers such as Anheuser-Busch's Michelob Ultra and Adolph Coors Co's Aspen Edge.

"The low carb effect has been useful, as it has prompted a reappraisal of the whole brand," said Chief Executive Graham Mackay, who believes the Miller Lite revival is sustainable.

SABMiller has promised to turn around Miller within three years and has said it is on schedule to see stable beer volumes by the final year of this plan during 2005-2006. As number two with a market share of around 18 percent it is fighting off the mighty Anheuser, which controls half the U.S. beer market.

SABMiller posted earnings before interest, tax and amortisation (EBITA) of $1.893 billion, just above analyst forecasts of $1.743-$1.848 billion for the year to March 31, on annual turnover up 41 percent at $12.645 billion.

Dealers said that, while the results were strong, news Altria's Chief Executive Louis Camilleri will leave the board in July may raise speculation Altria is getting ready to sell its 36 percent stake -- a legacy of the Miller deal -- when a lock-up period expires in June 2005.

Analyst Nigel Davies at SABMiller broker JP Morgan said good results across the group businesses prompted him to raise his earnings forecasts for the current year to 86.1 U.S. cents a share from his previous estimate of 80.4 cents. "These are very strong results across the board with solid organic growth while Miller looks very solid," he said.

But analyst James Williamson at SG Securities has a sell on the stock, although the results were very good. He said most of its divisions would now be trying to generate growth from a high comparative base and organic growth momentum, which excludes acquisitions and currency movements, would slow.

SABMiller is battling with Anheuser for control of China's number four brewer Harbin Brewery (0249.HK: Quote, Profile, Research) . The U.S. brewer has bought a 29 percent Harbin stake which has prompted SABMiller, which holds 29.4 percent, to launch a $533 million bid for Harbin, based in northeast China.

"Obviously this is an attractive deal and we are the ones to see the most benefits, but every asset has its price and this is not a deal we have to do," Mackay said. He added that SABMiller would submit its offer document in the next few days for Harbin and its offer would stay open for 28 days under Chinese rules.

Its South African business, accounting for around 35 percent of earnings, saw core profits jump 54 percent. But stripping out the effect of the strong rand against the dollar the rise was 15 percent as it benefited from beer volumes up three percent.

The company proposed an annual dividend up 20 percent at 30 U.S. cents, while adjusted earnings per share rose 44 percent to 77.6 US cents against analyst forecasts of 71-73.1 U.S. cents.



21 May, 2004