United Breweries (532478) Q4 97/98 earnings summary

Executive summary

• Maintained national beer market share above 40% amid economic and political turbulence; beer market growth was double digit in FY1997-98.

• Expanded the portfolio and production reach through new products, acquired and leased brewery capacity, and overseas distribution and investment initiatives.

Financial highlights

• FY1997-98 total revenue was Rs 3,639.6m, up 24% YoY; sales were Rs 3,038.6m versus Rs 2,571.7m.

• Reported profit before tax was Rs 255.8m versus Rs 189.4m; profit after tax was Rs 200.5m versus Rs 100.3m.

• EBDIT was Rs 736.5m, up 43% YoY; the chairman cited net earnings of Rs 315.1m, up 57% YoY, after Rs 366.1m of interest, lease and hire-purchase charges.

• Other income included a net Rs 382.6m gain on investment sales and a Rs 77.5m contingency deposit write-back; these items materially affected reported results.

• Proposed dividend was Rs 2 per equity share, a 20% rate; earnings per share were Rs 5.67.

Outlook and guidance

• Current-year prospects were considered satisfactory, barring unforeseen circumstances; plans called for new products and brands to strengthen market position.

• Planned launches included at least one additional strong beer and another new variant; Kingfisher Mineral Water was expected to expand nationally through franchise manufacturing in over 10 states.

• Overseas priorities included developing Sri Lanka, progressing China investment discussions, increasing marketing in Europe and shifting Kingfisher production from the UK to the US to improve margins.

• Management emphasized sales and revenue growth, cost control and higher operating margins amid uncertain economic and currency conditions.