UPDATE 3-SABMiller beer volumes dip in Q1, but grow in June

Thu Jul 22, 2010 10:55am EDT

* Underlying beer volumes down 1 percent year-on-year * Beer volumes improved through the quarter, growing in June

* Says financials in line with expectations

* Shares up more than 2 pct from less than 1 pct before news

(Updates shares, adds more analyst comment)

LONDON, July 22 (Reuters) - Brewer SABMiller (SAB.L) (SABJ.J) reported a decline in first-quarter beer volumes on Thursday despite a World Cup boost, after floods, national mourning and a tax hike hit drinking in key markets.

The brewer of Miller Lite, Peroni and Pilsner Urquell said that underlying beer and soft drink volumes were 1 percent down year-on-year. Investors were on balance expecting fractionally lower lager volumes, based on a Reuters poll of six analysts, with forecasts ranging from -1 to +1 percent.

However, the Chief Executive Graham Mackay said in a trading statement for its April-June quarter that lager volumes improved through the quarter, showing growth in June.

SABMiller's London-listed shares were up 2.7 percent at 1953 pence at 1445 GMT, from 1915 pence before the announcement. The Stoxx food and beverage index .SX3P was 1.3 percent higher.

Analysts said the June recovery was a promising sign for the coming quarters, when the company would also benefit from easier comparables in the United States and South Africa. Strong pricing was also a positive.

"Volumes recovered in June... although that's really what you would expect with the World Cup in June and slightly better weather," said Alex Oldroyd, analyst at Barclays Capital, which this week cut its rating on SABMiller to equal weight from overweight. "They are also saying some costs are down."

The world's No 2 brewer after Anheuser-Busch InBev (ABI.BR) added that its financial performance was in line with its expectations, with higher prices in places and some reduction of input costs.

SABMiller scored with its dominance in South Africa, hosts of the soccer World Cup, but the national sides of Poland and Colombia, key markets for the company, did not not qualify for the tournament.

Lager volumes in Colombia slumped 6 percent due to increased excise duty on beer, pushing up prices, poor weather and five dry days around presidential elections.

Volumes in Europe, mostly in eastern Europe, fell 9 percent, with poor economic conditions, flooding and nine days of national mourning in Poland over the death of the president limiting lager sales.

In South Africa, where SABMiller has some 90 percent of the market, the company has said it sold an extra 130,000 hectolitres, or about 44 million extra standard cans or bottles, due to the World Cup.

However, the Easter peak was in the first quarter this year. Unusually cold and wet weather did not help. Overall volumes there were flat.

In the United States, where it formed the MillerCoors (TAP.N) joint venture in July 2008, sales to retailers fell 2.4 percent in the quarter, depressed by economic concerns, particularly among the core younger drinking population.

Growth was strong in Africa and Asia.

SABMiller achieved 2 percent volume growth in the three months to end-March due to its extensive emerging market presence, surpassing figures of rivals Anheuser-Busch InBev (ABI.BR), Heineken (HEIN.AS) and Carlsberg (CARLb.CO).

They all report first-half results next month. (Reporting by Rosalba O'Brien and Philip Blenkinsop in Brussels; writing by Philip Blenkinsop; Editing by Samia Nakhoul)