SABMiller Raises Cost-Savings Target
October 09 2015 - 05:20AM
Dow Jones News
LONDON—SABMiller PLC on Friday upped its cost-savings target by
over $550 million, the London-based brewer's latest attempt to
underscore the strength of its business in the face of a takeover
approach by Anheuser-Busch InBev NV.
SABMiller has raised its annual savings target from a
cost-cutting program it announced in May of last year, while also
extending the timeframe within which it expects to achieve the
savings. The brewer now expects to save at least $1.05 billion by
the end of March 2020, up from the $500 million it had committed to
saving by the end of March 2018.
Chief Executive Alan Clark said while SABMiller is "already a
highly efficient business" with strong margins, "we are continuing
to remove duplication across markets, bringing specialist expertise
in areas like procurement under one roof, and standardizing common
processes."
The latest statement comes after SABMiller recently brought
forward a trading update slated for Oct 15, on Tuesday reporting
its sales in the three months ended Sept. 30 rose 6% from the
comparable period a year earlier, driven by 9% growth in Latin
America and 11% in Africa. Sales for the first six months of the
financial year were up just 4%, reflecting a second-quarter
improvement.
SABMiller wasn't required to release its results before the
offer period for a bid from AB InBev closes, but did so to give
shareholders more information about how the company was performing
before the so-called "put-up-or-shut-up" date of Oct. 14,by which
AB InBev needs to make a bid for the smaller brewer or walk
away.
SABMiller said the additional savings will come from its supply
chain, with about 70% of the additional savings announced Friday
coming from procurement and 30% from manufacturing and
distribution. The beer maker expects to take $26 million in costs
tied to the program by 2020.
SABMiller noted that in coming up with the new targets it has
assumed that there will be no change in ownership or control of the
company.
Over the past three weeks SABMiller has rejected three proposals
from AB InBev, including its latest proposal of £ 42.15 ($64.80) a
share in cash alongside a less valuable cash-and-stock deal
available to 41% of SABMiller's shareholders, saying this
undervalues the company.
On Wednesday, SABMiller responded to AB InBev's proposal, saying
its board "is confident that SABMiller's management team will
create sustainable shareholder value through its strong
differentiated standalone strategy." Among other things, SABMiller
said it has "an unmatched footprint in fast growing developing
markets," and noted that it was continuing to work to optimize
resources and reduce costs.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
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(END) Dow Jones Newswires
October 09, 2015 05:05 ET (09:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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