On Thursday, Grupo Casa Saba, S.A.B. de C.V. ADR (NYSE:SAB) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Here’s what the C-suite revealed.
Lauren Torres – HSBC: You addressed this question this morning on your earlier call, but I was hoping you could just talk a bit more about your confidence in improving margins this year. As we look at results last year and knowing that input costs are higher year-over-year for fiscal ’13 and knowing that Europe is challenging and potentially could get more challenging, I was hopeful that you could talk about where are the benefits coming from? How do you manage these potentially as some of these developed markets get tougher?
Jamie Wilson – Chief Financial Officer: Yes, let me see if I can help with on that. I think the answer is, the developed markets are continuing to grow, we see them continuing to grow into the incoming year. So I think in terms of relative situation relative to Europe they are in much better position and I don’t think therefore we’d see them as necessary being challenged, but certainly there is scope to grow. I think within that we also said that we had or we believe we have pricing power in all of those regions. I mean, yes, we run an affordability strategy, but we also run a penalization strategy where we are seeking to treat people up into premium brands as well as ensure that we have got offerings that meet consumer demands or value points. So I think if I look at that background and we would believe that we will be able to increase margins in those areas as a combination of pricing opportunities on certain brands, mixed businesses, but also our ability to control other fixed costs within those areas. And I think what we were saying this morning was a Group as whole by taking all of our regions together we would expect to be flat or positive. I think best guess would be that we would be a small amount positive in margins for next year and that’s where we would be targeting and it would be a blend of the markets where we are growing margin more strongly with those where perhaps the margins are more static.
Lauren Torres – HSBC: Can you also address the issue of capacity too as far as spending levels, what should we expect this year versus last and if that’s going to be any constrain on margins knowing that you may need to spend more in some of these markets?
Jamie Wilson – Chief Financial Officer: Within the capital numbers that we put out in the presentation and I talked about it a short while ago, we said that, capital expenditure this year was up on last year, but we would expect the same amount of flow through into the incoming year. We have announced a number of brewery expansions, particularly in Africa which is where the capacity constrains have been most felt, although we have also some capacity expansion in Latin America and in Peru in particular. The issue with something like Africa is that you can become the victim of your success. We have been growing very rapidly there and obviously, it takes time to build capacity. So, if the rate of growth is quite high than sometimes you get stages where you are capacity constrained. Those expansions are currently underway. We are rebuilding Ndola Brewery in Zambia, we are building a new brewery in Uganda, we putting on some additional capacity in Tanzania, we are building a brewery in Nigeria and we have already completed one in Southern Sudan. So from that perspective these expansions are either just been complete or come on stream towards the latter half of the first half and in most cases in well advance of the summer peak season. So we will have some capacity constrain over the next few months and then we would see that easing thereafter. The issue that that causes and you’ve seen from the results today is that while we have excess constraint, we have a slight restraint on margin. It didn’t push Africa into negative margins, but for the year it was more flat because we’re having to move beer slightly further than we’ve liked and that incurs transport costs, and cross boundaries that occasionally can incur tariffs, but obviously once the capacity comes on, those elements fall away. However, you bring on capacity which is not fully utilized, so the early stages is bringing on capacity, you get slight inefficiency on your fixed costs and then as we start filling out that capacity with the growth that we have in Africa, then you’ll find that those fall away and then margins will start advancing again. So, I think it’s a short-term issue in Africa, but it’s not one that we should be concerned about. I mean the good news is as our brands are becoming very appealing to customers and we’re able to grow our volumes and hence actually generate more absolute revenue. Certainly, if you look at the last year, we grew that revenue very strongly without actually any drop in margins. In the incoming year we would expect to be able to continue to grow revenue and hopefully actually increase margins to a marginal extent towards the second half of the year.
Gary Leibowitz – SVP, IR: Meanwhile, as Jamie said, while Latin America is growing margins, MillerCoors is growing margins, Asia is growing, South Africa certainly would be, if anything more strongly, if it weren’t for the weakening of the rand which is a question mark on the impact. So, all that set against the negative movement on Europe at the moment.
U.S. Debt Market
Priya Ohri-Gupta – Barclays Capital: Jamie, I just want to follow-up on some commentary that you have in the earlier presentation this morning around the proportion of U.S. dollar-denominated debt decreasing over the couple of coming years, as you repay borrowing and further re-denominate them and to re-denominate maturities into other operating currencies. Is it fair to assume then that we won’t see you back in the U.S. debt market over the next two years, or is that something that you continue to evaluate?
Jamie Wilson – Chief Financial Officer: No, I think you can assume that we may well come back into U.S. debt market because we will cycle some of our existing debt and we may choose to refinance that in the U.S. debt market. I think what we’re signaling there is that we will continue to look at repaying the facility we took out to buy Foster’s, not the bonds but the remaining facilities which were termed out for three and five-year term. So, as we get to the back end of the two years, we will be repaying some of that term loan. We also have some small maturing U.S. dollar denominated debt in that period and there would also be some actually Australian dollar debt that comes in into that period which was actually acquired by way of Fosters, but what you will see is for example as we see either bonds maturing or larger amounts coming to fruition and we may well come back to U.S. market to actually participate in that bond market. What we’re flagging up is that the profile is skewed more towards U.S. dollars than it normally would be not because so much of the bonds, but because of the remaining amount of term loan.