SABMiller improves guidance for Africa

By Guy Montague-Jones

- Last updated on GMT

Related tags: Finance, Investment

SABMiller has increased its medium term guidance for its Africa division following significant capital investment in 2009 and 2010.

Expectations for growth in revenue per hectolitre have increased from a range of 1 to 3 per cent to between 3 and 5 per cent.

The Africa division has already grown substantially in recent years. Clear beer volume has more than doubled in a decade and Africa (excluding South Africa) now accounts for about 11 per cent of group revenue.

Now SAB Miller has positioned itself for significant further expansion. Over the past three to four years the company has invested over $1.5bn in capital, with the bulk of that money spent in FY 2009 and 2010.

Mark Bowman, managing director at SABMiller Africa, said capacity and market penetration has increased and several new markets have opened up through acquisitions.

He added: “This investment is paying off and we are expecting to further cement our position as the leading brewer on the African continent.”

Despite increasing its medium term expectation for revenue growth, anticipated annual volume growth remained unchanged in the high single digits.

But previous guidance for flat margins has now been revised upwards. An average annual increase of 0.8 to 1 per cent is now anticipated over the next 3 to 4 years.

SABMiller spokesperson Nigel Fairbrass said the company reached the bottom of its margin cycle at the end of the last financial year following investment in new capacity. And the company was at the tail end of various long term contracts for raw materials that also put pressure on margins.

Fairbrass said: “We now have less pressure from raw material pricing due to the hedges that we have in place, and we are quickly beginning to improve utilisation rates (of extra capacity).”

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