Ann Crotty Writer-at-large

A lower tax charge, better than expected cost savings on the SABMiller acquisition and a 10.8% volume increase in South African beer sales in the three months to the end of June helped Anheuser Busch InBev (AB InBev) beat earnings’ expectations for the period.

The best quarterly performance in almost two years resulted in the AB InBev share price gain almost 6% on Thursday to a close of R1,591.

Total group volumes grew 1%, with strong performances in Mexico, Australia and SA more than making up for declines in US, Brazil and Colombia.

Normalised earnings before interest and tax was up 15% to $4.3bn. Normalised earnings per share dipped to $0.95, from $1.05 because of the increased number of shares in issue and mark-to-market adjustments.

AB InBev management said integration with the SABMiller businesses acquired in October 2016 was progressing well. During the second quarter, this had generated synergies and cost savings of $335m, which was $100m more than the $235m that had been forecast.

"We are also well under way sharing best practices, with intellectual synergies driving a new approach to category growth," said management.

Stella Artois and Corona recorded promising growth. Castle Lite continued its strong growth performance.

"When combined with the soft drink business, the business in SA delivered 8.8% revenue growth in the second quarter and 6.1% in [first-half] 2017. This strong top-line growth combined with synergy capture resulted in ebitda [earnings before interest, taxes, depreciation and amortisation] growth of almost 30% in [second-quarter] 2017 and almost 20% in half-year] 2017," said management.

Group interest costs were higher than most analysts had expected, but this was more than made up for by the much lower than expected tax charge.

Analysts had forecast an effective tax rate of 25%, but the actual rate was 21.3%. Management is amending its tax guidance for the 2017 financial year from the previous range of 24%-26% to 22%-24%.

Jean-Pierre Verster of Fair Tree Capital said Easter and the warm winter in SA had helped support strong volumes.

While there was increased volatility in some of its key markets, management said it expected to accelerate total revenue growth in financial 2017.

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