Brewer SABMiller Full-year Profit Down 7 Pct
The Associated Press
05/14/09 - 03:33 AM EDT
JANE WARDELL
LONDON (AP) SABMiller PLC, brewer of Grolsch and Peroni Nastro Azzurro lagers, posted a 7 percent fall in full-year net profit after the economic downturn escalated, adding on Thursday that there "remains little visibility" about the timing of a recovery in consumer demand.
The world's No. 2 brewer said it would scale back costs and investment but also underscored its plans to invest selectively by announcing it planned to acquire the outstanding 28.1 percent minority stake in its Polish subsidiary, Kompania Piwowarska S.A., from Kulczyk Holding S.A. in a deal worth $1.1 billion.
SABMiller reported a net profit of 1.88 billion pounds ($2.84 billion) for the year to March 31, down from 2.02 billion pounds a year earlier. Revenue fell about 9 percent to 18.7 billion pounds.
MillerCoors, SABMiller's joint venture in the U.S. and Puerto Rico with Molson Coors Brewing Co. created in July, had a good start though volumes were down in the first nine months of operation, the company said.
MillerCoors sales to wholesalers fell 1.9 percent on a pro forma basis which estimates what its performance would have been if it had been operational for the full year. Sales to retailers were down 0.4 percent.
SABMiller said lager volume in Latin America rose 1 percent with robust growth in Peru and Ecuador offset by the impact of the economic slowdown in Colombia and Central America.
In Europe, volume was in line with the previous year as economic conditions deteriorated sharply in the second half putting pressure on consumer disposable income.
"The group delivered robust results in the face of multiple challenges including higher commodity costs, an appreciating U.S. dollar and weakening consumer spend," said Chairman Meyer Kahn. "Our performance in this difficult environment was driven by continued adherence to our strategic priorities and the power of our leading local brands which have been patiently built over many years."
The Kompania Piwowarska deal will give SABMiller full control of its largest and most profitable business unit in Europe and while the company said it will have no material impact on earnings in the current financial year, it added that it will "be of significant strategic benefit in the medium term."
Kompania Piwowarska, which has the Tyskie and Lech brands, is currently the largest brewer in Poland with a market share of approximately 43 percent and volumes of 15.1 million hectolitres.
Under the deal, Kulczyk Holding will take up 60 million new shares in SABMiller, representing 3.8 percent of the issued share capital of the enlarged entity.
Standard & Poor's said that while that was relatively modest, the equity-funded nature of the transaction make it credit positive.
"This is because SABMiller would obtain the benefit of full control over the operating cash flows and assets," it said in a note.
SABMiller shares closed up 0.9 percent at 1,231 pence in London.
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