World: SABMiller announces 5% increase in its worldwide sales

SABMiller brewery reported on October 12 that its worldwide underlying beer volumes rose 5 % in the six months to end-September 2005, but warned of tough trading for Miller, Reuters communicated.

The brewer of Miller Lite, Castle and Peroni said in a trading update that the 5 % beer volume gain came after a 4 % rise in the year to March 2005, while its trading was in line with its expectations to see continued growth in underlying beer volumes.But the group warned North American trading was tough for its Miller business, with the United States No. 2 brewer seeing sales to retailers down 0.3 % in the half-year as U.S. leading brewer Anheuser-Busch fought back.

SABMiller said Miller trading in North America had become "increasingly price-competitive and subject to higher input costs, both of which have affected profitability" in an update ahead of half-year results due in November. The company, which brews Pilsner Urquell, Nastro Azzurro and Tyskie in Europe, said its 6-month underlying beer volumes there grew 5 %, with good growth in Poland allied to more moderate growth in most other European countries.

In South Africa, where the group has a 98 % beer market share, its comparable beer volumes rose almost 3 % in the six-month period, while its soft drink volumes climbed some 10 %.Its Africa and Asia business saw comparable beer volumes up 13 % driven by China, Mozambique and Tanzania, while beer volumes in Central America were off 7 % largely due to a beer excise duty increase in El Salvador.

SABMiller is expected to announce the completion of its $7.8 billion takeover of Colombia's Bavaria, South America's second biggest brewer, later on Wednesday to make SABMiller the world's second-largest brewer.

SABMiller shares have risen 22 % so far this year to close Tuesday at 10.58 pounds helped by a positive reaction to the Bavaria deal, although analysts say there are concerns about heightening competition in South America and the United States.

They say that with 85 % of profits coming from emerging markets, SABMiller, post Bavaria, will see more strong underlying growth but faces problems as South America's biggest brewer InBev starts to target Bavaria's markets and as Budweiser-brewer Anheuser-Busch heightens pressure on Miller.

SABMiller shares trade at 15.6 times 2006 earnings, in line with the European brewing average, but below the world's biggest brewer, the Belgium-based InBev, at 16.9 times.

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