SABMiller see H2 boost as H1 beats forecasts

World No. 2 brewer SABMiller Plc expects a second-half boost from a fall in the cost of inputs such as barley and favourable currency movements after it beat forecasts with a 6 percent rise in first-half earnings.

The London-based brewer of Miller Lite, Peroni and Grolsch beers said on Thursday it expected raw material costs to begin to ease towards the end of this year, while its second half should benefit from exchange rate movements. Although the brewer said current trading conditions were set to continue into the second half with unemployment and retail spending lagging the reported stabilisation of economic growth in many of its markets, many analysts were upbeat. "An outstanding set of H1 results from SABMiller, 17 percent ahead of our forecast at the EPS level ... We expect the shares to go higher today despite their recent strong run," said analyst Matthew Webb at brokers Cazenove.

The brewer reported adjusted earnings per share of 80 U.S. cents for the six months to end-September, compared with average forecasts of 71 cents, according to Thomson Reuters I/B/E/S, while the half-year dividend rose 6 percent to 17 cents a share.

"The group's financial position remains strong and we are well positioned to take advantage of future improvements in the market environment," the group said in a results statement. The brewer had suffered from the strong dollar and high commodity contract prices it was locked into, but forward contracts for barley, aluminium and glass will now start to unwind, and it should benefit if its major operating currencies remain at current levels.

The brewer, which earns nearly 90 percent of its profits from emerging markets such as South Africa, Colombia, Poland and China, made no mention of Mexico's second-biggest brewer FEMSA Cerveza after analysts tipped SABMiller as the front-runner to buy the business.

SABMiller shares have rallied sharply from a mid-March low of 906 pence and currently trade at 15.9 times March 2011 forecast earnings, similar to larger rival Anheuser Busch-InBev's 16 times forecast 2010 earnings. SABMiller stock closed at 16.57 pounds on Wednesday.