SABMiller share price up, revenue rises despite lower China volumes

SABMiller Plc, the worlds second-largest brewer, reported on Wednesday an increase in third quarter revenue, but said gains were capped by lower demand in China.

Net producer revenue, which accounts for excise and other taxes, climbed 4% in the three months to December 31, mirroring analysts expectations.

“We continued to drive steady net producer revenue growth, notwithstanding varied local market performances, as we benefited from the breadth of our global portfolio of businesses,” said Chief Executive Alan Clark in a trading statement.

Lager volumes dropped 1% during the quarter, compared to an estimate of 0.7% increase compiled by Bloomberg. Meanwhile, soft drinks continued to expand with a 4% rise.

With declining lager volumes, SABMiller has focused on soft drinks, which account for more that 20% of the brewers sales. In November the company inked a deal with Coca-Cola to join operations in Africa, making SABMiller the largest bottler in the region for the US company.

In the Asia Pacific region volumes fell 7% in the quarter, which also led to a decline in revenue of 2%, worse that the 1% drop registered in the first half. The company blamed bad weather for its poor results in China, where revenue decreased 7%, driven by a 9% drop in volumes.

Performance was hurt the most in the countrys northeast and central provinces, where volumes scored double-digit declines. China is the worlds largest lager market by volume.

“More difficult trading conditions, particularly in China, held back the overall group performance,” said Mr. Clark.

Africa maintained its position of the companys best performing region. Revenue jumped 7% in the quarter, while beverage volumes increase 4%, driven by improved demand for SABMillers premium category.

“During the quarter, our Latin America and Africa businesses continued to grow both volumes and revenues, together with Europe,” added Mr. Clark

Sales in Europe climbed 3% with beverage volume growth of 2%, despite low inflation, the company said. Performance in the region was boosted by strong results from the Czech Republic and Slovakia.

SABMiller lost 1.21% on Tuesday and closed at GBX 3 343 in London. On Wednesday the stock edged up 1.33% to GBX 3 388 at 12:38 GMT, marking a one-year increase of 9.66%. The company is valued at 53.83 billion.