Market Preview is published daily an hour before trading kicks off on the London Stock Exchange, giving investors a roundup of macroeconomic and corporate news that is likely to move the markets along with the expected opening level of the FTSE 100.


Tuesday's agenda: Amber nectar and Mexican silver

January 21 2013, 6:00pm
Citigroup predicts SABMiller will deliver organic growth of lager volumes of around 2%.

Multinational lager brewer SABMiller (LON:SAB) issues a trading statement covering its fiscal third quarter, and should be able to toast top line growth.

The market is expecting lager volumes to be up 3% year-on-year and for sales growth of around 6,5% to 7%.

Citigroup predicts organic growth of lager volumes will be around 2%.

"We expect a relatively subdued figure due to weakness in China (≈22% of volumes, but only about 2½% of profit). Here competition has been tough and weather has been cold and damp vs. 3Q12, so we are below consensus for Asia," Citi notes.

"On revenue we are more bullish as we expect good geographical mix, with growth in Latin America due to drier weather," Citi adds.

The US bank reckons the main issues will be whether slowing emerging market economies are beginning to hurt SABMiller's volumes, while the latest trends in Europe will also be in focus, as these have been volatile lately.

Citi wonders what effect adverse weather and weakening consumer sentiment, especially in Poland, has had on volumes.

In Latin America - the brewer's biggest profits contributor - is tipped by Citi to have seen accelerated growth, thanks to the drier weather in Colombia.

Credit Suisse is predicting a slow-down in larger volume growth to around 2%, largely due to capacity constraints in Africa kicking in during peak season.

The Swiss bank tips organic revenue growth for the third quarter of 6%, year-on-year.

If your taste in beer runs to less fizzy fare, Pedigree bitter brewer Marston's (LON:MARS) might be of more interest to you.

It releases an interim management statement, covering its fiscal first quarter.

"The group should have benefitted from a fairly strong Christmas and New Year trading period," Panmure Gordon reckons.

"After the first eight weeks of FY 2013E managed pub LFL [like-for-like] sales growth was 2.0% and we expect this rate of growth to have been at least maintained," the broker added.

Peel Hunt is singing from the same hymn sheet as Panmure Gordon so far as Marston's performance is concerned. It also expects the LFL sales growth rate from the first eight weeks to have been maintained over the rest of the quarter.

"The general sector experience over the past few months has been a good Christmas and New Year post, with more challenging trading conditions ahead of this – we see no reason why Marston’s will be any different," Peel Hunt said.

"We also expect Tenanted profits to be up slightly as the underlying improvement in the quality of the estate offsets disposals," the broker added.

Citi adds a third voice to the choir, but notes "the tough comparatives from Q1 last year (+5%), which could cause near-term performance to slightly disappoint."

On the mining front, silver and gold miner Fresnillo (LON:FRES) should deliver a production update in line with guidance of 41mln ounces of silver in 2012.

"The Fresnillo mine has been struggling with a decline in ore grades but has compensated somewhat by increasing the volume of ore milled. Saucito had a mill malfunction in Q3 but we expect that FRES made up for that lost production in Q4," Citi predicts.

Citi expects 2012 gold production to be in line with the 460,000 ounces targeted by the group.

Switching to matters macroeconomic, the UK's public sector net borrowing requirement for December is expected to have narrowed to £13bn from £15.32bn in November.

The CBI industrial trends survey index reading for January is tipped by Shore Capital to come in at -10, following December's -12 reading.

"After a poor Christmas, were there January sales," the broker asks.

Announcements expected

Companies: SABMiller, Cairn Energy, Fresnillo, Marston’s

Macroeconomic: CBI industrial trends, UK public sector net cash requirement, US existing home sales, ZEW surveys

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