United Breweries (532478) Q4 00/01 earnings summary

Executive summary

• FY2000-01 turnover grew 25% and volumes rose 16%, ahead of industry volume growth of 7.6%; beer operations delivered satisfactory results in a competitive market.

• Kingfisher remained the leading brand, while acquisitions and capacity investments brought controlled brewing capacity to about 50% of the national total.

• Lower income from investment sales weighed on profitability; plans were advanced to separate brewing operations from other businesses and seek a strategic global brewing investor.

Financial highlights

• Total revenue was Rs 3,818.97m versus Rs 3,753.15m; sales and service income, net of excise recovered, was Rs 3,393.18m versus Rs 2,704.13m.

• Profit after tax was Rs 31.03m versus Rs 110.02m; lower other income, chiefly from reduced investment sales, was a principal factor in lower profitability.

• Other income fell Rs 630m YoY, largely due to lower investment disposals; the core brewing business itself produced satisfactory results.

• The directors recommended a dividend of Rs 1.50 per equity share, equivalent to 15%.

Outlook and guidance

• Management planned to deploy resources for further growth in FY2001-02 and remained cautiously optimistic about a more favorable regulatory environment for beer.

• Q1 growth was 11% in a subdued market, adding 200 bps to market share; the estimated industry growth was 2%.

• State measures included approval to reintroduce draught beer in Andhra Pradesh, registration of Kingfisher Strong, Kingfisher Gold and ICE Beer there, and a price increase in Tamil Nadu.

• A strategic minority investment in the brewing business was being pursued, with advisers appointed and a partner selection targeted by year-end.