UPDATE 2-SABMiller's Q1 beer volumes dip, share price sinks

(Adds analyst comment, further details, updates shares)

By David Jones

LONDON, July 31 (Reuters) - Brewing giant SABMiller Plc (SAB.L) reported a below-forecast 1.6 percent fall in first-quarter underlying beer volumes and warned of challenging trading in South Africa, sending its shares lower.

Analysts had expected beer volumes for the April-June first quarter to show between growth of 3.5 percent and a fall of 1.0 percent, with the average forecast in a Reuters poll of analysts pointing to growth of around 1.3 percent.

Shares in the London-based maker of Miller Lite, Peroni and Pilsner Urquell fell 3.4 percent to 10.66 pounds by 1135 GMT after trading around 10.90 pounds before the trading update.

The brewer reported a 7 percent rise in underlying volumes for its financial year to end-March 2008, but analysts had expected slower growth in the first quarter as beer price rises hit volume growth and it faced tough comparative figures.

SABMiller is the world's largest brewer by beer volume, but will lose that crown when InBev's INTB.BR deal to buy Anheuser-Busch (BUD.N) is completed later this year.

Analyst Matthew Webb at Cazenove says he expects to trim his earnings forecasts by around two percent to reflect conditions in South Africa and says the shares trade on 13.1 times his 2009 earnings forecast, against the brewing sector's 12.3 times.

"We believe that SABMiller's organic growth rate will be below the rest of the sector in the short term, which makes it hard to argue for an immediate expansion of this premium." In South Africa, its biggest profit centre with 28 percent of earnings, beer volumes fell 3 percent reflecting the loss of its Amstel licence in March 2007 and softer consumer demand due to higher interest rates and increasing food and energy costs.

Latin America, with a quarter of earnings, saw flat volumes with its biggest market Colombia off 4 percent as retail prices and interest rates rose. In North America, Miller's sales fell 2 percent, with top brand Miller Lite off 1.6 percent.

In Europe, volumes rose 1 percent as growth in Poland and Romania was offset by a fall in Russia and the Czech Republic. In Africa and Asia, volumes were off 4 percent with China down 5 percent hit by disruption after the Sichuan earthquake.

The group said overall beer volumes for its April-June quarter grew 1.5 percent and group revenue growth remained firm, while its financial performance for the quarter was in line with its own expectations.

The brewer was giving a routine first-quarter trading update ahead of its annual shareholders' meeting. (Reporting by David Jones; Editing by Greg Mahlich)