Currency headwinds eat up SABMiller’s profits ahead of the megabrew deal with AB InBev
A strong dollar took a large chunk out of SABMiller’s results, and despite strong growth in emerging markets the beer giant posted drooping profits ahead of the megabrew deal with AB InBev.
The figures
SABMiller posted underlying growth, with group net producer revenue growing by four per cent to $12.69bn at constant currency rates in the first six months to 30 September. But currency headwinds struck hard against the UK brewing giant’s results, and factoring in exchange rates revenue was down nine per cent against the same period last year.
Net earnings before interest, taxes, depreciation and amortisation were down 11 per cent to $2.92bn and pre-tax profit down 18 per cent to $2.33bn.
The company hiked its interim dividend to 28.5 cents a share, a nine per cent rise.
SABMiller shares have soared 35 per cent in the two months since AB InBev's interest in its rival was made public.
Why it’s interesting
Shareholders will have been waiting with bated breath for SABMiller's results following the megabrew deal, to see just what AB InBev has bought.
AB InBev’s £71bn takeover was formally agreed yesterday, after weeks of negotiations and several extended deadlines from UK regulators as the two brewing giants ironed out the details of the biggest ever corporate merger in British history.
Read more: Everything you need to know about the megabrew deal
The deal creates the world’s biggest brewing company by far, and combines most of the world’s biggest beer brands under the same roof.
But no sooner has the ink dried on the megabrew deal than the hangover begins to set in: analysts expect the takeover to result in thousands of job cuts, closing SABMiller’s London headquarters and de-listing from the London Stock Exchange.
SABMiller reported particularly strong growth in emerging markets in Latin America and Africa, where sales were up by eight and nine per cent respectively on constant exchange rates. The takeover will give AB InBev a significant foothold on the African market, where the brewer currently has essentially no presence, and a much stronger position in Latin America.
What they said
Alan Clark, SABMiller’s chief executive, said:
We had a good first half, stripping out the effects of adverse exchange rates, with strong growth in Africa and Latin America and better mix across all of our regions. On an organic, constant currency basis, group earnings and margins improved as a result of growing volumes and NPR per hectolitre, and continued cost savings.