SABMiller suffers surprise drop in profit

SABMILLER, the world's second-largest brewer by volume, yesterday posted an unexpected decline in full year results.

The upturn that the brewer noted in 2009 did not continue into the new year. Shares in the global brewer dropped more than 5% on the London Stock Exchange after the release of results for the year ended March.

CEO Graham Mackay said the environment was starting to improve in some of its emerging markets, which earn more than 85% of group profit. But a broader recovery in consumer spending is not expected before the second half of the current financial year.

The brewer holds premium beers such as Pilsner Urquell, Peroni Nastro Azzurro and Miller Genuine Draft; along with iconic regional brands such as Castle in SA and Snow in China. Strong profit growth came from Latin America, Africa and China but eastern Europe was "pretty depressed" and the US is still a declining beer market.

The group continues to lose market share in SA, where beer volumes were down 1% on the previous year in a market that grew marginally. SA company SAB's revenue grew 6% on a constant currency basis to $4,7billion, driven largely by price increases in line with inflation. The brewer expects volumes in SA to increase by 4% to 6% for the World Cup.

Raw material costs remained under pressure mainly due to medium-term contractual arrangements with key suppliers, which limited the company's ability to benefit from the downturn in commodity prices.