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Trouble's Brewing for SABMiller; Merrill Lynch Posts Biggest Loss in 94 Years; Generic Drugs Wound Novartis Profits; Reliance Reaps Refining Profit
- SABMiller Plc (PINK:SBMRF), the world's third-largest brewer, reported slowed sales growth in the third quarter, yesterday (Thursday). Excluding revenue from acquisitions, beer sales grew just 4.1% for the three months ended December 31, well below the 11% growth recorded in second quarter of the year and below analysts' expectations of 7%. Sales slowed in all three of SABMiller's major markets – Europe, Lain America and South Africa. Chief Executive E.A. Graham MacKay said that the company has faced twin pressures of investing money in emerging markets and dramatically higher commodity prices. Restoring profit margins could take as long as two to three years he said.
- Merrill Lynch & Co. (MER) recorded its biggest quarterly loss since the company's founding 94 years ago. The world's largest brokerage took almost $15 billion worth of write-downs from bad subprime mortgage bets, the reported. Massive writedowns from securities backed by mortgages resulted in a fourth-quarter loss of close to $10 billion. “I don't think you should anticipate any further problems of this magnitude," John Thain, Chief Executive Officer at Merrill Lynch, said on a conference call with reporters. "There would have to be something incredibly bad out there to have this happen again, and our whole goals is to get 2007 behind us." Thain pledged to clear the brokerage's books and shore up its capital base as the company fights its ay through credit market turmoil. He replaced Stan O'Neal, who was ousted after the former CEO's strategy on subprime mortgages backfired when homeowners defaulted on their loans at an alarming rate.
- Zurich-based pharmaceutical giant Novartis AG (NVS) reported fourth-quarter profits clocked in at $904 million, a 45% drop from $1.65 billion in quarterly profits the year earlier, . The company recorded double-digit sales gains in most parts of the world, but sales were weak – down 15% – in its largest market, the United States, where it faces competition from generic drugs and regulatory problems with the Food and Drug Administration. Novartis plans to buyback $9.04 billion of stock, a plan that will be presented for shareholder vote at its annual meeting, The company is also planning to increase its dividend by 19% to $1.45 per share.
- Reliance Industries LTD (PINK:RLNIY), India's biggest company, reported yesterday (Thursday) that profits more than doubled in 2007, Bloomberg reported. Total profits for the company reached $2.01 billion. Total sales rose to $8.9 billion, 21% higher than the 7.4 billion posted in 2006. The catch: the results included a one-time gain from the sale of part of Reliance Petroleum Ltd. Excluding that gain, operating profits were $966 million. More than 73% of the company's revenue now comes form oil refining where margins remained strong, rising from 9% last year, to 10%. Reliance refining capacity could almost double later this year when its new refinery – reported to be the largest in the world – in Western India is completed.