Annual Report - SABMiller India

Chief Executive’s reviewSuccess requires a broad, global spread of businesses, a full portfolioof brands, outstanding operational capability and talented people.As a result of consistently sticking to its strategic priorities, SABMillerhas all these requisites in place.Graham Mackay, Chief ExecutiveOwning the growthThis year has seen another strongperformance with results continuing thetrend of several very strong years. Adjustedearnings per share grew by 19%, bringingthe compound annual growth rate over thelast six years to some 20% per annum. At143.1 US cents, our adjusted earnings pershare have very nearly trebled since 2002.Review of operationsWhile each of our markets has its ownunique drivers of profit growth, there arecommon themes that have characterisedour success this year. Our focus on buildingleading, local, mainstream and premiumbrands and managing full brand portfoliosin each market has been successful indriving up revenues and profits andexpanding our organic market share.What we’ve demonstrated is that strongerbrands can deliver better value to ourconsumers and sustain firmer pricing.As a consequence, revenues have grownstrongly across the business and havemore than offset higher input costs.We have also improved our brand mix,selling more higher-value brands in packsthat generate higher margins. Given thetrend towards premium beers, wecontinue to work hard to enhance ouroffering in this segment. We’re alsostarting to see a meaningful contributionfrom brand innovations.Consumer demand remained strongduring the year, particularly in ourdeveloping markets. As a result, we’vecontinued to make significant investments– some US$2.0 billion in total – in additionalproduction capacity, the provision of fridgesand the introduction of new bottles toensure we’re positioned to take advantageof the growth in our markets. We’ve alsoinvested heavily in product and packaginginnovations.Europe continued its very successfulrun with marketing and brand investmentsproducing gains in market share in oursix largest markets and pushing organiclager volumes up by 8%. Almost a third ofvolumes came from local product and packinnovations undertaken in the last threeyears. The region has also seen robustprice growth with EBITA rising 30% as wecapitalise on the strength of our brands.After several brand launches andrenovations in the prior year, Latin Americadelivered lager volume growth of 5%.Strong revenue and cost managementas well as favourable currency impacts,drove solid profit growth with EBITA up17%. We expect further growth as wecontinue to make the beer category moreappealing through clearer segmentationof the market, improved brand portfoliosand more effective and efficient sellingand distribution.In North America, Miller BrewingCompany has returned to growth afterthe previous years’ setbacks. EBITA wasup by 27%, driven by a 4% increase insales to retailers along with higher pricing,brand mix improvements, cost savings anda non-recurring gain. Miller’s worthmoreportfolio overall grew by nearly 50% withthe newly launched Miller Chill sellingsome 500,000 barrels during the year.The underlying momentum of the businesswill help considerably as we prepare forthe proposed joint venture with Coors.We hope to close the transaction inmid-2008.Robust economic conditions in Africacontributed to a 6% growth in organiclager volumes from the group’s operationson the continent (excluding Zimbabwe).Beer sales in our key markets of Tanzaniaand Mozambique continue to expandrapidly, despite tough comparisons withthe previous year. Growth in Botswanahas also been excellent, following therenovation of the St Louis brand andthe launch of returnable glass bottles.Our partners in Africa, Castel, have alsodelivered a laudable performance intheir markets.In Asia, the group’s associate in China,CR Snow, has extended its lead, acquiringa further four breweries in the year andgrowing volumes by 15% on an organicbasis to bring its market share to 18%.Recent industry-wide price increases willhelp to cover rising input costs in the shortterm and, more importantly, bode well forfuture profitability. In India, despite overburdening regulation, we achieved organicvolume growth of 19%. Our import-ledbusiness in Australia continues to growstrongly, albeit from a small base.Overview Operating and financial review Governance Financial statements Shareholder informationChief Executive’s review 7SABMiller plc Annual Report 2008