United Breweries (532478) Q4 04/05 earnings summary

Executive summary

• FY05 net turnover rose 13.6% to Rs5,153.8m; sales volume grew 10% to 36.4m cases, ahead of estimated industry growth of 8%.

• PBT increased to Rs252.1m from Rs41.9m and PAT to Rs140.4m from Rs27.8m, aided by higher volumes, input-cost control and lower interest expense.

• Strong beer and new product launches supported growth; the S&N alliance added strategic capital and expanded distribution prospects.

Financial highlights

• Net turnover was Rs5,153.8m vs Rs4,536.8m; PBIDT was Rs566.0m vs Rs433.3m.

• Interest expense fell to Rs208.2m from Rs324.5m; depreciation increased to Rs105.7m from Rs66.9m.

• PAT was Rs140.4m vs Rs27.8m; basic/diluted EPS was Rs5.41 vs Rs1.56. FY04 PBT included a Rs32.18m non-recurring loss.

• Consolidated sales and service after excise were Rs5,787.6m vs Rs4,949.7m; consolidated loss after tax was Rs120.9m vs Rs122.9m.

• No equity dividend was proposed; ROCPS preference dividend was paid at 5% pro rata.

Outlook and guidance

• Low beer consumption, youth demographics and rising incomes were cited as growth drivers; sustained industry growth depends on a more favourable regulatory environment.

• Tax harmonization and taxation based on alcohol content rather than ad valorem rates were advocated to improve affordability and broaden demand.

• S&N’s global distribution network was expected to support Kingfisher in overseas markets; operational integration with Millennium Alcobev was expected to improve market coverage, capacity use and procurement.

• Acquisition of the demerged brewing business of Karnataka Breweries & Distilleries was expected to strengthen capacity in Karnataka and support sales and profit growth.