Where would SABMiller be without Africa?
SABMiller, the last of the big four global brewers to report full year results, said on 24 May 2012 that revenue jumped 11 percent to USD 31.4 billion for the twelve months to 31 March 2012. Pre-tax profit was up 55 percent but that was flattered by more than USD 1 billion in one-off items, including the sale of its Russian and Ukrainian businesses to Anadolu Efes, in exchange for a stake in the business, and the refund of a fine in Europe.
Adjusted pre-tax profit was up 13 percent at USD 5.1 billion. Still, the revenue was only slightly ahead of analysts’ expectations while profit was slightly behind expectations.
Lager volumes were 229 million hl, or 3 percent ahead of the prior year on an organic basis with particularly strong growth delivered in Latin America and Africa. Soft drinks volumes stood at 49 million hl, 7 percent ahead of the prior year on an organic basis.
The company said expensive “world beers” had helped it to buck the wider trend in the UK of declining lager sales.
SABMiller reported an 8 percent jump in sales volumes in the UK last year compared with a 9 percent decline across the rest of Europe.
Graham Mackay, Executive Chairman of SABMiller, said sales of continental beers had grown “lustily” as they appealed to richer drinkers who are more immune to the wider financial conditions.
“In the UK, the dynamic seems to flow free from the economic situation ... because it plays to the wealthier part of the market,” he said.
SABMiller also credited growth in emerging markets such as Latin America and Africa for the surge in pre-tax profits. Profit in Latin America, which now accounts for a third of SABMiller’s business, rose 14 percent to USD 1.87 billion.
Africa (without the South African business) saw 16 percent sales growth last year and Mr Mackay said it could overtake North America this year to become the third biggest contributor to the group. However, all of SABMiller’s African units combined already contribute the most to SABMiller’s EBITA.
Mr Mackay also took the opportunity of the presentation of the brewer’s results to slam the UK government for micro-managing the business world and making the UK a less attractive destination for firms.
According to UK media, he reiterated a veiled threat to move the firm’s domicile abroad. Sadly, he did not say where to.
He told the Mail newspaper: “Personal tax rates are too high and are a disincentive to those who have businesses here and could relocate. The UK has become a less attractive destination for mobile talent. The government is doing some right things but business is overregulated in this country.”
Mr Mackay understandably bears a grudge against the UK government and UK media. Only in April was he dragged before a parliamentary committee over SABMiller’s alleged tax dodging in Africa. And the more recent criticism of the brewer’s boardroom reshuffle, especially the bit directed at him personally, cannot have soothed his anger either.
His remarks perhaps ruffled a few feathers in Whitehall. But that’s soon to be forgotten by shareholders who wonder how SABMiller’s share price will fare after Mr Mackay’s reign. He managed to more than double it from where it was five years ago. Not some small feat. But in the financial world, that’s already water under the bridge. It’s living up to future expectations that this game is all about.
