A cold and wet winter in China hit lager sales for brewing giant SABMiller, but the company still met market expectations in its latest update.
It said overall revenues for the third quarter were up 8% on the previous year, or up 17% including acquisitions. In volume terms, lager rose by 2% and soft drinks by 3%, and the company said its financial performance was in line with expectations.
In Latin America, lager volumes rose by 6%, in Europe by 1% - with some beer markets hit by depressed consumer confidence - and in Africa by 4%. But in China they fell by 3%. Phil Carroll at Shore Capital said:
Overall, the statement shows a positive organic revenue performance of 8% growth, ahead of our forecast of 7% and we suspect slight ahead of market expectations too. The volume performance however, is more mixed with organic lager volumes up 2% compared to our 3% forecast and soft drinks up 3% behind our 4% estimate.
SAB is currently trading on a 2013 PE of 19.5 times...which is a premium valuation in relation to the wider beverage sector. Whilst we believe this partly reflects the quality of SAB as a business along with its high level of emerging market exposure (around 68% of group profits), we believe it is currently up with events following the recent share price appreciation. Therefore, we retain our hold recommendation.
In the market SAB has edged up 28p to 2988.5p.
