SAB expects more tough times

SABMiller, the world's second largest brewer by volume, said yesterday that trading conditions are expected to continue to be tough in the second half of the year.

But the business expects to benefit from favourable currency movements and lower cost pressures.

Net profit dropped from $1,423billion to $973billion for the six months ended September, hit by weaker currencies in emerging markets, which reduced the value of local sales and drove up input costs.

The brewer also faced weaker beer markets in many of the countries in which it operates.

Sales dropped 21 percent from $11,17billion to $8,85billion, while earnings beat analysts' estimates.

The one percent decline in beer volumes was more resilient than peers' because of operations in emerging markets such as China faring better than more developed countries. The brewer earns about 90 percent of its profits from emerging markets.

The group announced a four-year cost reduction plan to save $300million a year by 2014, in which the aim is to globalise their IT systems.

SABMiller chief executive Graham Mackay said market share was not built at the expense of unit profitability.

Absa Investments analyst Chris Gilmour said SAB was definitely taking strain, and had been hit by the recession.