SABMiller runs into tough trading in Europe and U.S.

Thu Nov 17, 2011 5:17am EST
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By David Jones

LONDON (Reuters) - Brewer SABMiller Plc SAB.L complained of tough trading in Europe and North America and warned that conditions would stay difficult in the short term as hard-pressed consumers in mature markets economize on their favorite tipples.

The world's No 2 brewer and maker of Miller Lite, Peroni and Grolsch narrowly missed forecasts with an 11 percent rise in half-year earnings, helped by its strong presence in emerging markets where rising sales are offsetting weakness elsewhere.

Chief Executive Graham Mackay warned that faltering economies and shaky consumer confidence were hitting beer drinking in Europe and the United States, where consumers are facing high unemployment and poor economic growth prospects.

"It's a two-speed situation and thank the Lord for that, with emerging markets powering ahead, while we do not see Europe and the U.S. staying in the doldrums for ever," he told a half-year results briefing on Thursday.

The company earns over 80 percent of its profit from fast- growing emerging markets, but earnings fell in both Europe and North America as the group suffered flat volumes in the former and sold less beer in the later.

Mackay added that the problem in the United States is one of unemployment, but there were signs of drinkers moving to premium-price beers, while the crisis in Europe -- where the group operates largely in the east rather than the euro zone -- was one of bank debt and lack of consumer confidence.

While these two areas are expected to stay difficult in the short term, Mackay saw favorable conditions elsewhere, particularly in Latin America and Africa where he announced a $555 million investment in four African nations and Peru.

The London-based company reported adjusted earnings per share of 103.3 U.S. cents for its half-year through September, below the forecast 103.9 cents from a company-compiled consensus and a ThomsonReuters I/B/E/S forecast of 103.5 cents.   Continued...