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SABMiller Flags Weak China Demand As Volume Growth Slows

Tuesday flagged weak demand in China as the brewing giant recorded slowing global volume growth.

Beer volumes for the third quarter rose 2% before acquisitions and disposals, representing a slowdown from 3% growth a year earlier and 4% in the first half. Soft drinks volumes increased 3%.

But volumes in Asia-Pacific, excluding Australia, fell 1%, hit by "subdued" demand in China, where volumes fell 3% "due mainly to an exceptionally cold and wet winter across the country." This compares with 7% volume growth in Asia Pacific a year earlier.

Still, the Australian business, which had been under scrutiny following the company's $10 billion acquisition of Foster's in 2011, started to improve with sales for the quarter down 4% on a comparative basis, compared with a 8% decline in the previous six months. Flagship brand Victoria Bitter grew 2%, its first quarter of growth for more than 10 years, and SABMiller said the integration program in Australia is ahead of schedule.

Latin America, the brewing group's biggest region, saw beer volume growth recover to 6%, up from 4% in the first-half, but down from 8% in the same period last year.

Volumes in Africa grew 4%, with South Africa volumes up 3%.

European volumes rose only 1% with some beer markets hit by "depressed consumer confidence", the company said.

In North America, MillerCoors LLC--the joint venture between SABMiller and Molson Coors Brewing Co. (>> Molson Coors Brewing Company)--said domestic sales to retailers were down 1.1%. Domestic sales to wholesalers fell 1.4%. Still, analysts say U.S. beer demand is showing signs of improvement, supported by rising employment.

SABMiller, the world's No. 2 brewer behind Anheuser-Busch InBev NV (ABI.BT ) and whose brands include Peroni Nastro Azzuro, pushed through price increases in some regions which boosted revenue per hectolitre by 5% while revenue rose 8% in the quarter, before acquisitions and disposals on constant currencies.

SABMiller shares closed Monday at 2960.5 pence, valuing the company at 47.26 billion pounds ($74.94 billion).

22 Jan. 2013

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