Investment recommendatin Coursework Example | Topics and Well Written Essays - 2500 words

SABMiller Plc and Kingfisher Plc - Coursework Example Although regarded as a non-cyclical industry, beer brewing has been affected by reduced overall demand for goods worldwide, including consumer goods, and SABMiller saw its turnover drop, albeit not very significant, in 2009. According to the CBI Economic Forecast published in December 2009, there will be a modest recovery of world economic activity in 2010, but the longer-term trend will not resume until 2011. For the UK, this marginal growth will be driven by continuing strong Government spending, a modest increase in exports, and some recovery of consumer spending. The UK Gross Domestic Product is forecast to grow by 2.2 percent this year, and 2.5 percent the year after that. Consumer spending growth will be hampered by high energy costs, unwillingness to borrow, and the need to save for future needs. The company belongs to the non-cyclical consumer goods and services sector, and the beverages/brewers industry. (Reuters). According to Hoovers, industry demand is driven by consumer preferences for alcohol consumption as well as demographic trends. As is true for most consumer products, success often goes to large companies because of their effective sales operations, broad distribution networks, and economies of scale. The industry is capital intensive. The top competitors of SABMiller plc are, Diageo plc, Heineken NV., and Anheuser-Busch InBev. The latter replaced SABMiller as the worlds biggest brewer after InBev acquired Anheuser-Busch for $52 billion in 2008. The company recorded a revenue level of US$18.7 billion in 2009 and a net income of US$2.16 billion compared to US$2.29 the year before. Sales in 2009 dropped 12.6 percent due to the global recession, but overall revenue has grown by an annual average of 10.5 percent over 5 years and 6.9 percent over three years. Earnings per share average 18.6 percent over five years and 6.13 for the last three years.