Brewer SABMiller posts small rise in annual profitThursday 22 May 2014 12.29
Global brewer SABMiller announced a new cost-savings target today to help cushion it against difficult trading in a range of markets.
This sent its shares higher as investors anticipated a consequent boost to earnings.
The maker of Miller Lite and Peroni beers is struggling to grow in Europe and North America - like many consumer goods companies.
Its new revenues from an emerging middle-class in developing markets have been dented by weak currencies in many of those countries of late.
It announced full-year earnings up 1% at $6.45 billion, narrowly passing analysts forecasts, while net revenue was down 1% to $26.72 billion, narrowly missing forecasts.
The weakening of the South African rand and Turkish lira, among other currencies, shaved about $400m from operating earnings.
In response, SABMiller said it would aim to hit $500m a year in savings by the fiscal year ending in 2018 "to deliver efficiencies to invest ... and improve our margins."
The new programme builds on an earlier one whereby SABMiller standardised its computer and procurement systems and aims to make back-office processes more efficient as well as double the amount of raw material purchasing handled by its central procurement system to allow for more efficient buying.
SABMiller recently posted full-year sales volume growth of 2%, with lager volume up only 1%, hurt by volatility in African markets including Zimbabwe, Mozambique and Zambia.
Today it said that trading in the new year fiscal year, which began in April, should be broadly unchanged, with growth driven by developing markets which would however continue to be affected by currency movements.
SABMiller said it expects to continue to raise prices on some products as raw material costs are expected to rise at a low single-digit rate.