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TEXT-S&P revises SABMiller outlook to positive
July 2, 2012 / 1:58 PM / 5 years ago

TEXT-S&P revises SABMiller outlook to positive

July 2 - Overview
     -- U.K.-incorporated international brewer SABMiller PLC benefits from 
broader geographic diversity following its acquisition of Australian brewer 
Foster's Group Ltd. (Foster's).
     -- We assess that SABMiller now has a more balanced exposure to developed 
and developing markets. In addition, the group has confirmed its commitment to 
a leverage target of 2.0x-2.5x.
     -- We are therefore revising the outlook on SABMiller to positive from 
stable and affirming our 'BBB+/A-2' long- and short-term corporate credit 
ratings on the group.
     -- The positive outlook reflects the possibility of an upgrade if 
SABMiller's integration of Foster's realizes operational targets such as 
synergies and profitable growth.

Rating Action
On July 2, 2012, Standard & Poor's Ratings Services revised the outlook on 
U.K.-incorporated international brewer SABMiller PLC to positive from
stable. At the same time, we affirmed our 'BBB+' long-term and 'A-2' short-term 
corporate credit ratings on the group.

Rationale
The outlook revision reflects our view that SABMiller benefits from broader 
geographic diversity following its acquisition of Australian brewer Foster's 
Group Ltd. (Foster's). In addition, we assess that SABMiller's exposure to 
developed and developing markets is now more balanced. Furthermore, we think 
that Foster's is in a position to benefit from access to SABMiller's supply 
chain and marketing and development capabilities. SABMiller plans to increase 
the revenues and reduce the costs of Foster's Australian beverage unit Carlton 
and United Breweries, and expects to realize synergies of A$180 million per 
year by the fourth year after the acquisition. 

We assess SABMiller's business risk profile as "strong," supported by its 
strong brands, its leading market shares in many of its key regions, its 
efficient manufacturing processes, and its geographic diversification. In the 
year ended March 2012, 32% of the group's reported EBITA derived from Latin 
America; 14% from Europe; 13% from North America; 13% from Africa; 6% from 
Asia Pacific; and 22% from South Africa. These numbers include Foster's 
results from mid-December 2011.

An upgrade depends on the success of SABMiller's integration plan for 
Foster's, in terms of profitable growth and the realization of synergies. It 
also depends on the group reaching and maintaining a Standard & 
Poor's-adjusted ratio of funds from operations (FFO) to debt of at least 30%. 
We estimate that on a pro forma basis accounting for earnings from Foster's, 
the group's adjusted FFO to debt was about 25% at the end of March 2012, and 
adjusted debt to EBITDA was about 3x. 

We think that SABMiller's exposure to developing regions will help it to grow 
its revenues in the mid-single digits over the next few years. We believe that 
the group will be able to protect its margins against commodity price 
inflation using cost control and innovation, which should support selective 
price increases. We therefore project that SABMiller will be able to reduce 
its adjusted leverage to between 2.5x and 3.0x and reach adjusted FFO to debt 
of about 30% by the end of financial 2013 (ending March 31). This projection 
is supported by our understanding that the group is committed to achieving and 
maintaining a leverage target of 2.0x-2.5x. 

Liquidity
The 'A-2' short-term rating reflects our opinion that over the short term, 
SABMiller should have ample internal liquidity, good cash flow 
characteristics, and significant access to the capital markets. We view 
SABMiller's liquidity as "adequate" under our criteria, indicating that 
sources of cash are sufficient to cover uses of cash by at least 1.2x over the 
next 12 months.

We estimate that SABMiller's liquidity sources over the next 12 months 
comprise:
     -- A balance of cash and cash equivalents of $745 million at the end of 
March 2012.
     -- Undrawn committed credit facilities maturing in more than one year of 
$3 billion, $2,236 million of which mature in more than five years.
     -- FFO of about $5.4 billion. 

We estimate that SABMiller's liquidity uses over the next 12 months comprise:
     -- Short-term debt of $1.1 billion at the end of March 2012.
     -- Capital expenditure of about $1.6 billion.
     -- A dividend payment of about $1.5 billion.

In addition, we consider that the following factors support SABMiller's 
"adequate" liquidity profile:
     -- Good access to capital markets, as demonstrated by SABMiller's 
successful refinancing of $7 billion of the Foster's acquisition bank debt in 
the U.S. bond market earlier this year.
     -- Significant headroom under the single covenant in the group's bank 
facilities.
     -- The absence of downward rating triggers that would accelerate the 
maturity of a material amount of debt.

Outlook 
The positive outlook reflects the possibility of an upgrade if SABMiller's 
integration of Foster's realizes operational targets such as synergies and 
profitable growth. In addition, an upgrade depends on the group reaching and 
maintaining adjusted FFO to debt of at least 30%, which corresponds to 
adjusted debt to EBITDA of 2x-3x. An upgrade does not depend on a reduction in 
leverage to less than 2x. This is because of the positive effect that we 
assess Foster's has had on the group's business risk profile, mainly through 
an improvement in its geographic diversity and the balance between developed 
and developing markets.

We could revise the outlook to stable if adjusted FFO to debt does not 
increase to close to 30% by the end of March 2013. This could happen if the 
group increases its discretionary spending on acquisitions and paybacks to 
shareholders. However, we understand that SABMiller remains committed to its 
public leverage target of 2.0x-2.5x.

Related Criteria And Research
All articles listed below are available on RatingsDirect on the Global Credit 
Portal, unless otherwise stated.
     -- Key Credit Factors: Criteria For Rating The Global Branded Nondurable 
Consumer Products Industry, April 28, 2011
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 
May 27, 2009
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
     -- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008


Ratings List
Ratings Affirmed; CreditWatch/Outlook Action
                                        To                 From
SABMiller PLC
 Corporate Credit Rating                BBB+/Positive/A-2  BBB+/Stable/A-2
  Senior Unsecured Debt                 BBB+               BBB+

Miller Brewing Co.
 Senior Unsecured Debt (1)              BBB+               BBB+

SABMiller Holdings Inc
 Senior Unsecured Debt (2)              BBB+               BBB+

SABSA Holdings (Proprietary) Ltd.
 Senior Unsecured Debt (2)              zaAA               zaAA

(1) Guaraneed by SABMiller PLC and SABMiller Finance B.V.
(2) Guaranteed by SABMiller PLC.



Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.  Alternatively, call one of the following Standard & Poor's numbers: 
Client Support Europe (44) 20-7176-7176; London Press Office (44) 
20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm 
(46) 8-440-5914; or Moscow 7 (495) 783-4009.

Primary Credit Analyst: Samira Sattarzadeh, CFA, London (44) 20-7176-7082;
                        Samira_Sattarzadeh@standardandpoors.com
Secondary Contact: Nicolas Baudouin, Paris (33) 1-4420-6672;
                   nicolas_baudouin@standardandpoors.com
Additional Contact: Industrial Ratings Europe;
                    CorporateFinanceEurope@standardandpoors.com


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 Time          USN   User   Headline
 02/07/2012    WNA0  WE     S&P REVISES SABMILLER OUTLOOK TO POS;
 09:50:03      29    SCRIP  AFFIRMS 'BBB+/A-2' RTGS
 Overview -- U.K.-incorporated international brewer SABMiller PLC benefits from
broader geographic diversity following its acquisition of Australian brewer
Foster's Group Ltd. (Foster's). -- We assess that SABMiller now has a more
balanced exposure to developed and developing markets. In addition, the group
has confirmed its commitment to a leverage target of 2.0x-2.5x. -- We are
therefore revising the outlook on SABMiller to positive from stable and
affirming our 'BBB+/A-2' long- and short-term corporate credit ratings on the
group. -- The positive outlook reflects the possibility of an upgrade if
SABMiller's integration of Foster's realizes operational targets such as
synergies and profitable growth. Rating Action On July 2, 2012, Standard &
Poor's Ratings Services revised the outlook on U.K.-incorporated international
brewer SABMiller PLC to positive from stable. At the same time, we affirmed our
'BBB+' long-term and 'A-2' short-term corporate credit ratings on the group.
Rationale The outlook revision reflects our view that SABMiller benefits from
broader geographic diversity following its acquisition of Australian brewer
Foster's Group Ltd. (Foster's). In addition, we assess that SABMiller's exposure
to developed and developing markets is now more balanced. Furthermore, we think
that Foster's is in a position to benefit from access to SABMiller's supply
chain and marketing and development capabilities. SABMiller plans to increase
the revenues and reduce the costs of Foster's Australian beverage unit Carlton
and United Breweries, and expects to realize synergies of A$180 million per year
by the fourth year after the acquisition. We assess SABMiller's business risk
profile as "strong," supported by its strong brands, its leading market shares
in many of its key regions, its efficient manufacturing processes, and its
geographic diversification. In the year ended March 2012, 32% of the group's
reported EBITA derived from Latin America; 14% from Europe; 13% from North
America; 13% from Africa; 6% from Asia Pacific; and 22% from South Africa. These
numbers include Foster's results from mid-December 2011. An upgrade depends on
the success of SABMiller's integration plan for Foster's, in terms of profitable
growth and the realization of synergies. It also depends on the group reaching
and maintaining a Standard & Poor's-adjusted ratio of funds from operations
(FFO) to debt of at least 30%. We estimate that on a pro forma basis accounting
for earnings from Foster's, the group's adjusted FFO to debt was about 25% at
the end of March 2012, and adjusted debt to EBITDA was about 3x. We think that
SABMiller's exposure to developing regions will help it to grow its revenues in
the mid-single digits over the next few years. We believe that the group will be
able to protect its margins against commodity price inflation using cost control
and innovation, which should support selective price increases. We therefore
project that SABMiller will be able to reduce its adjusted leverage to between
2.5x and 3.0x and reach adjusted FFO to debt of about 30% by the end of
financial 2013 (ending March 31). This projection is supported by our
understanding that the group is committed to achieving and maintaining a
leverage target of 2.0x-2.5x. Liquidity The 'A-2' short-term rating reflects our
opinion that over the short term, SABMiller should have ample internal
liquidity, good cash flow characteristics, and significant access to the capital
markets. We view SABMiller's liquidity as "adequate" under our criteria,
indicating that sources of cash are sufficient to cover uses of cash by at least
1.2x over the next 12 months. We estimate that SABMiller's liquidity sources
over the next 12 months comprise: -- A balance of cash and cash equivalents of
$745 million at the end of March 2012. -- Undrawn committed credit facilities
maturing in more than one year of $3 billion, $2,236 million of which mature in
more than five years. -- FFO of about $5.4 billion. We estimate that SABMiller's
liquidity uses over the next 12 months comprise: -- Short-term debt of $1.1
billion at the end of March 2012. -- Capital expenditure of about $1.6 billion.
-- A dividend payment of about $1.5 billion. In addition, we consider that the
following factors support SABMiller's "adequate" liquidity profile: -- Good
access to capital markets, as demonstrated by SABMiller's successful refinancing
of $7 billion of the Foster's acquisition bank debt in the U.S. bond market
earlier this year. -- Significant headroom under the single covenant in the
group's bank facilities. -- The absence of downward rating triggers that would
accelerate the maturity of a material amount of debt. Outlook The positive
outlook reflects the possibility of an upgrade if SABMiller's integration of
Foster's realizes operational targets such as synergies and profitable growth.
In addition, an upgrade depends on the group reaching and maintaining adjusted
FFO to debt of at least 30%, which corresponds to adjusted debt to EBITDA of
2x-3x. An upgrade does not depend on a reduction in leverage to less than 2x.
This is because of the positive effect that we assess Foster's has had on the
group's business risk profile, mainly through an improvement in its geographic
diversity and the balance between developed and developing markets. We could
revise the outlook to stable if adjusted FFO to debt does not increase to close
to 30% by the end of March 2013. This could happen if the group increases its
discretionary spending on acquisitions and paybacks to shareholders. However, we
understand that SABMiller remains committed to its public leverage target of
2.0x-2.5x. Related Criteria And Research All articles listed below are available
on RatingsDirect on the Global Credit Portal, unless otherwise stated. -- Key
Credit Factors: Criteria For Rating The Global Branded Nondurable Consumer
Products Industry, April 28, 2011 -- Criteria Methodology: Business
Risk/Financial Risk Matrix Expanded, May 27, 2009 -- 2008 Corporate Criteria:
Analytical Methodology, April 15, 2008 -- 2008 Corporate Criteria: Ratios And
Adjustments, April 15, 2008 Ratings List Ratings Affirmed; CreditWatch/Outlook
Action To From SABMiller PLC Corporate Credit Rating BBB+/Positive/A-2
BBB+/Stable/A-2 Senior Unsecured Debt BBB+ BBB+ Miller Brewing Co. Senior
Unsecured Debt (1) BBB+ BBB+ SABMiller Holdings Inc Senior Unsecured Debt (2)
BBB+ BBB+ SABSA Holdings (Proprietary) Ltd. Senior Unsecured Debt (2) zaAA zaAA
(1) Guaraneed by SABMiller PLC and SABMiller Finance B.V. (2) Guaranteed by
SABMiller PLC. Complete ratings information is available to subscribers of
RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All
ratings affected by this rating action can be found on Standard & Poor's public
Web site at www.standardandpoors.com. Use the Ratings search box located in the
left column. Alternatively, call one of the following Standard & Poor's numbers:
Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605;
Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914;
or Moscow 7 (495) 783-4009. Primary Credit Analyst: Samira Sattarzadeh, CFA,
London (44) 20-7176-7082; Samira_Sattarzadeh@standardandpoors.com Secondary
Contact: Nicolas Baudouin, Paris (33) 1-4420-6672;
nicolas_baudouin@standardandpoors.com Additional Contact: Industrial Ratings
Europe; CorporateFinanceEurope@standardandpoors.com No content (including
ratings, credit-related analyses and data, model, software, or other application
or output therefrom) or any part thereof (Content) may be modified, reverse
engineered, reproduced, or distributed in any form by any means, or stored in a
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Poor's Financial Services LLC or its affiliates (collectively, S&P). The Content
shall not be used for any unlawful or unauthorized purposes. S&P and any
third-party providers, as well as their directors, officers, shareholders,
employees, or agents (collectively S&P Parties) do not guarantee the accuracy,
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responsible for any errors or omissions (negligent or otherwise), regardless of
the cause, for the results obtained from the use of the Content, or for the
security or maintenance of any data input by the user. The Content is provided
on an "as is" basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED
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FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR
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expenses, legal fees, or losses (including, without limitation, lost income or
lost profits and opportunity costs or losses caused by negligence) in connection
with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the
Content are statements of opinion as of the date they are expressed and not
statements of fact. S&P's opinions, analyses, and rating acknowledgment
decisions (described below) are not recommendations to purchase, hold, or sell
any securities or to make any investment decisions, and do not address the
suitability of any security. S&P assumes no obligation to update the Content
following publication in any form or format. The Content should not be relied on
and is not a substitute for the skill, judgment, and experience of the user, its
management, employees, advisors, and/or clients when making investment and other
business decisions. S&P does not act as a fiduciary or an investment advisor
except where registered as such. While S&P has obtained information from sources
it believes to be reliable, S&P does not perform an audit and undertakes no duty
of due diligence or independent verification of any information it receives. To
the extent that regulatory authorities allow a rating agency to acknowledge in
one jurisdiction a rating issued in another jurisdiction for certain regulatory
purposes, S&P reserves the right to assign, withdraw, or suspend such
acknowledgement at any time and in its sole discretion. S&P Parties disclaim any
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of their respective activities. As a result, certain business units of S&P may
have information that is not available to other S&P business units. S&P has
established policies and procedures to maintain the confidentiality of certain
nonpublic information received in connection with each analytical process. S&P
may receive compensation for its ratings and certain analyses, normally from
issuers or underwriters of securities or from obligors. S&P reserves the right
to disseminate its opinions and analyses. S&P's public ratings and analyses are
made available on its Web sites, www.standardandpoors.com (free of charge), and
www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be
distributed through other means, including via S&P publications and third-party
redistributors. Additional information about our ratings fees is available at
www.standardandpoors.com/usratingsfees. Any Passwords/user IDs issued by S&P to
users are single user-dedicated and may ONLY be used by the individual to whom
they have been assigned. No sharing of passwords/user IDs and no simultaneous
access via the same password/user ID is permitted. To reprint, translate, or use
the data or information other than as provided herein, contact Client Services,
55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to:
research_request@standardandpoors.com. Copyright (c) 2012 by Standard & Poor's
Financial Services LLC. All rights reserved. In addition to CreditWire, Standard
& Poor's also offers RatingsDirect, the online source for real-time, objective
credit ratings and research; and RatingsXpress, a real-time, customizable
digital feed of credit information. If you are interested in becoming a
subscriber and would like more information on Standard & Poor's real-time
information products and services, please call: HONG KONG (852) 2533-3500;
LONDON (44) 20-7176-7176; MELBOURNE (61) 3-9631-2000; NEW YORK (1) 212-438-7280;
PARIS (33) 1-4420-6758 NORMAL RATINGS S&P Revises SABMiller Outlook To Pos;
Affirms 'BBB+/A-2' Rtgs yes

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