Global brewing giant SABMiller has reported strong results for the year ended March, despite sharp rises in input costs, notably barley, hops, packaging and energy.

Total beverage volumes were up six percent to 288-million hectolitres and total lager volumes were up 11 percent to 239-million hl, including the impact of acquisitions in China and Europe.

A 15 percent increase in group revenue translated into Ebita growth of 15 percent to $4.141-billion, or nine percent on an organic constant currency basis.

SABMiller CEO Graham Mackay told a conference call on Thursday that this reflected the benefit of price increases, mix improvements and productivity gains, all of which have offset the rise in input costs.

"The group's ability to recover these higher costs underlines the strength of its brands and its operational capability in enhancing net revenue per hectolitre through effective control of package mix and portfolio pricing," he said.

Mackay said that the group's European business has delivered an "excellent performance", driven by Poland, Romania and Russia.

Europe achieved organic lager growth of eight percent and Ebita growth of 15 percent in organic constant currency and 30 percent on a reported basis.

Price increases, mix improvements and the introduction of new products and packs, assisted by operational efficiencies, offset significant brewing raw material and packaging cost increases.

In the Czech Republic, the Kozel brand grew by 19 percent in its domestic market and continues to establish itself as a powerful regional brand, selling 2.8-million hl over the period.

In Italy, Birra Peroni was the fastest-growing brewer in 2007, with a share gain of almost 100 basis points in a level market. The company's core brands, Peroni and Nastro Azzurro, grew volumes by seven percent and eight percent respectively, reflecting a successful on-premise strategy in the north of the country.

Integration of the Grolsch business

Mackay said the integration of the Grolsch business is now largely complete and SABMiller is looking forward to launching the brand in a number of new markets this year.

In North America, Mackay noted that Miller continued to migrate its portfolio to higher margin and higher growth segments with the launch of Miller Chill, a 'chelada-style' light beer brewed with lime and salt.

One of the most successful brand launches in SABMiller's history, Miller Chill sold almost half a million barrels in its first year, contributing to a 49 percent increase in Miller's worthmore portfolio, which includes Sparks, Peroni and Leinenkugel's, all of which grew at double-digit rates.

While higher fuel costs and declining real estate prices impacted consumer spending in the second half, Miller's overall domestic sales to retailers for the year were up 0.7 percent on an organic basis, with the company's flagship brand, Miller Lite, up 1.1 percent.

To capture the continuing consumer preference for light beers, Miller has test marketed new light beers, Miller Genuine Draft 64 and the Miller Lite Brewer’s Collection, which will be rolled out nationally in the next financial year, the group said.

Mackay said Miller was entering a new chapter with momentum and as a much stronger business.

Latin America achieved lager volume growth of five percent, following exceptionally high growth in the prior year.

Mackay said while a consumer slow-down in Colombia and price-driven competitive pressure in Peru represented some challenges, the group had continued its programme of investment and modernisation in the Andean region and the full benefit of these activities was still to be realised.

There have been significant fixed cost productivity improvements. Ebita rose by six percent in organic constant currency, or 17 percent on a reported basis.

In South Africa, where the group began the year with the loss of a major premium brand – Amstel — to a competitor in March 2007, overall volumes were level with the prior year, representing a satisfactory result.

The decline in premium volumes was partially mitigated by the successful launch of Hansa Marzen Gold and growth in excess of 100 percent in Peroni Nastro Azzurro. The robust performance of Hansa Pilsner and Castle Milk Stout underpinned mid single digit growth in the mainstream category. Soft drinks grew four percent despite cycling tough comparatives in the final quarter. Ebita for the period declined six percent on a constant currency basis, reflecting the lower premium volumes, a large increase in brewing raw material costs and a significant increase in distribution costs.

Mackay said the results in South Africa were "satisfactory, given the loss of the Amstel licence and a challenging consumer environment."

Strong on Amstel

He said Amstel is a very strong brand in SA. "We spent 40 years creating it, to expect Hansa Marzen Gold to take over from it immediately will be foolish." He added that he expects Hansa Marzen Gold to be successful, but it will need to be around for a long time to achieve the levels of Amstel.

In Africa, robust economic conditions with high resource prices and investment underpinning growth, contributed to organic lager volume growth of six percent from the group's Africa operations (excluding Zimbabwe). A significant capital expenditure programme is under way in these markets, including the construction of several new greenfield breweries to exploit anticipated future volume growth.

In Asia, the group's associate in China, CR Snow, acquired a further four breweries in the year and grew volumes by 15 percent on an organic basis, ahead of the overall market. The Snow brand enjoyed exceptional growth of 63 percent, cementing its position amongst the top three beer brands in the world by volume.

Looking ahead, Mackay said in the current year, volume growth in the first half would be affected by high comparative growth rates, and pressure on input costs would continue to increase, although pricing and mix benefits were again expected to compensate for these cost increases.

"The economic outlook across our global footprint, which is biased towards growth markets in developing countries, remains positive, and we will continue to benefit from the strength of our brands, operational capability and investment for growth," he concluded.

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