SABMiller shrugs off weak Chinese lager volumes - UPDATE

SABMiller managed to shrug off a slowdown in some markets and declining lager volumes in China, as it achieved an acceleration in revenue growth in the third quarter.

Shares gained 1.33% to 3,000p, an all-time high, on Tuesday after the Miller Lite and Foster's maker said that reported revenues, which include the effect of acquisitions and disposals, increased by 17% year-on-year in the three months to December 31st 2012, well ahead of the 11% rise reported in the first half.

On an organic basis, which excludes acquisitions and disposals, this translated to growth of 8.0%, unchanged from the first half but ahead of the 6.5% increase expected by analysts. Growth was bolstered by selective price increase and improved brand mix in most region, the company said.

However, organic lager volumes for the quarter rose by just 2.0% on the year before, below the 4.0% increase in the first half, as accelerating growth in its biggest market, Latin America, was offset by a slowdown in Europe, Africa and Asia Pacific.

SABMiller highlighted "subdued" volumes in China, which declined by 3%, due to the unusually cold and wet winter weather during the period. European lager volumes were said to have been affected by "depressed consumer confidence".

Nevertheless, analysts at Jefferies highlighted today that while volume growth failed to meet estimates, this was mainly due to weaker performance in the lower-margin regions for the group (Europe and Asia). Higher-margin regions such as Latin America (its largest market) and South Africa performed strongly during the period.

Meanwhile, volume patterns in Australia showed signs of improvement in the three months to December 31st 2012, with the rate of decline easing. "We would expect this improving trend to continue in the coming quarters," Jefferies said.

The broker maintained its 'buy' recommendation for the shares, saying: "Overall, supportive to the high-growth credentials of the group and to our estimate for 100 basis points of organic margin improvement in 2013."