I’ve recently been looking at shares that are heading for a winning 2013, and today I want to turn to something a bit special.
Brewer SABMiller (LSE: SAB) (NASDAQOTH: SBMRY.US) has not only gained 15.4% since the start of 2013 to reach today’s share price of 3,260p, edging out the FTSE 100’s 14.1% gain over the same period, but it has already beaten the FTSE for 12 straight years and this year looks set to make 13 in a row!
It’s up how much?
Over the past 10 years the FTSE 100 has appreciated by 58%, but from a price of 498p at the end of October 2013, SABMiller shares are up 556%! How did it do it?
Most people, when they think of SABMiller, will think of those premium beer brands well known in Europe and the USA — like Carling, Peroni, Miller, Grolsch, Urquell, Coors. In fact, SABMiller is the world’s second-largest brewer and is also a major bottler of Coca-cola — and it even owns the Bulmers and Strongbow brands in Australia.
But you might be surprised to learn that SABMiller’s biggest single-country market is South Africa, with Colombia in second place. In fact, the UK accounts for only around 2% of annual turnover, with the USA only contributing 1%.
Modest origins
SABMiller started life as South African Breweries (which is where the ‘SAB’ bit comes from) way back in 1895 and it has come to dominate its home market — and for most of the next century the firm sold its brews mainly in that region.
It wasn’t until the 1990s that the firm started eying up international expansion, and set off on a successful takeover adventure.
SABMiller listed on the London Stock Exchange as late as 1990, and went on to take over Miller Brewing Company of the USA the same year (getting the second part of its moniker in the process), acquired a sizable chunk of Columbia’s Bavaria Brewery in 2005, and snapped up Foster’s in 2011 (with the exception of the UK and Europe, where Heineken owns the brand).
Profits rising
Sales and profits have been steadily mounting, and for the year ending March 2013, SABMiller saw revenue of $34.5bn and an adjusted pre-tax profit of $5.63bn, for rises of 10% and 11% respectively. Adjusted earnings per share gained 11% to 238 cents, though for this year there’s more a modest growth of 4% forecast.
Despite such growth, the company carried relatively moderate debt, seeing it fall by $2.16bn in 2013 to $15.7bn — that’s more than small change, but it’s less than one year’s turnover and less than three years’ profits.
When I think of companies that have expanded internationally, got some of their markets wrong, overstretched themselves financially, or hit any of the other pitfalls awaiting the unwary — I look at SABMiller through the eyes of a long-term investor and think that’s the way to do it.
Even if SABMiller doesn’t quite manage to beat the FTSE for a 13th year this year, it’ll still be a winner for me.