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Tag: China Resources Beer (Holdings) Co

  • China Resources’s Beer Profit Gains as Retail Units Deepen Loss

    China Resources’s Beer Profit Gains as Retail Units Deepen Loss

    China Resources Beer Holdings Co., the maker of the world’s best-selling beer, reported earnings that missed analyst estimates as sales slowed amid a competitive market and a slowing economy.

    Underlying profit for the beer assets rose 14 percent to HK$831 million ($107 million) in the 12 months ended December, missing an average estimate of HK$933 million from 15 analysts compiled by Bloomberg. The underlying figure excludes asset revaluation and major disposals. Beer sales last year rose 1 percent to HK$34.82 billion.

    China Resources’ Snow beer is the world’s top beer brand, but its presence is predominately in China, where economic growth was at 6.9 percent last year, the least since 1990. The nation’s beer market is one of the most competitive, with major brewers including Tsingtao Brewery Co., Beijing Yanjing Brewery Co., Anheuser-Busch InBev NV, and a myriad of smaller, regional ones.

    The stock rose 3 percent to HK$15.10 in Hong Kong trading, the highest level since March 4 after the Chinese company said the deal to buy out the remaining 49 percent stake in its venture with SABMiller Plc has been submitted to the Ministry of Commerce. The update came from Jason Hou, the general manager of the venture, at a press conference in Hong Kong Friday.

    The deal is scheduled to close at the end of this year and impact earnings only in 2017.

    Snow beer, which has some of the lowest prices in the market according to a January report from Macquarie Group Ltd., has struggled to get drinkers to switch over to its higher-priced offerings, which would offer the company bigger margins.

    The company had sold its non-beer assets, including its money-losing retail venture with Tesco Plc, to its parent for HK$30 billion last year. This was to allow it to focus on its top-selling Snow beer as the existing multi-business structure didn’t reflect its full value, it had said.

    Underlying losses at discontinued operations, comprising retail, food and beverages, widened to HK$5.65 billion from HK$1.52 billion, it said Friday.

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  • AB InBev sells SABMiller’s stake in Chinese brewer

    AB InBev sells SABMiller’s stake in Chinese brewer

    The world’s top brewer, Anheuser-Busch InBev, has agreed to sell SABMiller’s stake in China’s leading beer maker to the local partner for $1.6bn, as part of a mega-merger between the giants.

    China Resources Beer (Holdings) Co will buy the 49% stake in Snow Breweries, its joint venture with SABMiller, it said in a statement to the Hong Kong stock exchange, where it is listed.

    It said the deal would go through “as soon as practicable” after AB InBev, a Belgian-Brazilian company, takes over SABMiller.

    AB InBev announced in November last year that it would buy SABMiller for $121bn — the third-largest acquisition in history — creating a juggernaut that brews three times as much beer as its nearest rival.

    Analysts said the sale appeared aimed at persuading Chinese regulators to sign off on the deal.

    AB InBev aims to complete the SABMiller takeover by the end of this year, and said last month the plans were on track.

    “After the acquisition deal between AB InBev and SABMiller, their market share in China would have exceeded 40%. This may not pass the antitrust survey by the ministry of commerce, so AB InBev had to sell the stake,” Guotai Junan Securities analyst Song Tao said.

    The Snow Breweries venture, set up in 1994, has a market share of about 24% in China and operates 98 plants across the country, according to SABMiller, which describes the venture’s Snow product as the world’s biggest beer brand.

    AB InBev already has a presence in China with a 15.9% domestic market share and 39 beverage plants as of 2014, according to the company.

    But analysts said that shedding the Snow Breweries holding was a setback for the newly formed entity in the world’s biggest beer market, while China Resources Beer — part of the massive conglomerate China Resources — loses a strong foreign partner, leaving it weak in the premium segment.

    “Losing the Snow Breweries stake has a huge impact on the foreign brand because it will lose the price negotiation advantage it used to have with raw material suppliers and the scale-of-production advantage from the factories,” said Stacey Yu, an analyst at consultancy Business Connect China.

    Analysts said competition was expected to intensify in the Chinese beer market, where growth was slowing in the face of economic headwinds.

    “Without one company dominating the market and enjoying increased pricing power, the beer market will remain fiercely competitive,” Mr Song said.

    AB InBev has acquired or formed partnerships with a number of leading Chinese brewers and doubled its China business in 2006 by acquiring Fujian Sedrin Brewery.

    At 10.10am,

    SABMiller shares were up 0.49% at R925.74 at 10.10am on the JSE, valuing the company at about R1.8-trillion, while AB InBev had added 1.26% to R1,792.31, valuing the company at about R2.8-trillion.

    In Hong Kong, shares in China Resources Beer jumped 25% to their highest level in five years, regaining ground lost so far this year after the stock was dropped from the main constituents in the Hang Seng index.

     

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