SABMiller cheered by better economic conditions in its emerging markets

The largely emerging market brewer has escaped most of the tough times seen by others with big exposure to flat western European beer markets, but like its rivals will face higher input costs in the future as barley and corn prices rise.

London-based SABMiller, brewer of Miller Lite, Peroni and Grolsch, raised beer prices to boost its quarterly revenue by 6 per cent and said an improving Europe had helped to compensate for a fall in Colombia, which was hit by the heaviest rain for 50 years.

Strong volume growth in Asia and Africa offset volume dips in both North and South America in its October-December third quarter which is heavily dependent on summer beer drinking in the southern markets of South Africa and Latin America.

The big surprise came in Europe where quarterly volumes were flat after forecasts for a continued fall. Growth in Britain and Ukraine helped offset falls in Russia and the Czech Republic as its premium brands Pilsner Urquell and Grolsch sold well across the group's largely eastern European business.

"Trading momentum, as evidenced by the trading update from SABMiller remains strong; while regional comments from the group reinforces our pecking order among the brewers – SABMiller is our top pick in beer," said analyst Simon Hales at brokers Evolution Securities.

Investors were looking for slightly higher beer volumes with a consensus for growth of 1.6 per cent after the group's first-half (April-Sept) saw a 1 per cent rise in beer volumes.

Second quarter volumes had been up 3 per cent after a 1 per cent first quarter fall.

Analysts said the brewer, which earns over 80 per cent of its profits in emerging markets, is seeing trading picking up in most including South Africa, Poland, China and Peru while its biggest mature market of the United States remains tough.

The second largest brewer in the world after Anheuser-Busch InBev, SABMiller said it has benefited in the quarter from lower costs of barley, glass and aluminium, but still expects costs to edge up in its next year to March 2012.