Performance highlights of United Breweries Limited

November 14th, 2007 - 8:14 am ICT by admin  
This year, new competition has arrived from a number of International brewers determined to make their mark in this important emerging beer market. In spite of this, UBL has continued to demonstrate its leadership credentials through the strength of its portfolio and established infrastructure.

The Industry continues to be driven by Strong beer with growth in the half year of around 15.7%. UBL has delivered a 21% increase in Strong beer sales in the half year, led by Kingfisher Strong, which alone registered nearly 24% growth with sales exceeding 16m cases. The mild beer segment has shown a significant decline during the second quarter, and has only managed 6% growth during the half year. The UBL mild beer brands have managed to grow slightly ahead of the industry, with Kingfisher premium growing in line with the market.

To continue the growth of the Kingfisher brand during the quarter Kingfisher Draught beer was launched in 500ml cans. The striking yellow format of the product, combined with the great taste of fresh draught beer, is already proving a success with consumers.

The excellent volume performance has been passed through to the UBL bottom line generating an operating profit of Rs122.23Cr, registering a 29% growth versus last year. In spite of the significant strain placed upon margins through increased input prices, and the limited ability to raise prices in many States, UBL has been able to maintain it’s operating margin directionally in line with last year, through improved efficiencies, and careful cost management, and, continue to increase investment in brand building activity.

As detailed last quarter the comparative numbers do not include the merged operations of KBDL, which was only merged in June 2007 and as a consequence the numbers are not comparable, on a line-by-line analysis. Due to the this lack of comparability, and the effect of the Hyderabad brewery on the business in profit terms, the Board of Directors have published the combined results of the UBL and MABL entities (100%, not statutory consolidation) to provide greater transparency to members. The combined results show an increase in EBITDA of 30% to Rs143.31Cr, from Rs109.75Cr last year.

In light of the significant growth in the Indian Beer market, and in order to maintain it’s market leadership position, the board of Directors have sanctioned approval to invest around Rs1,200Cr in the expansion of capacity in existing breweries, and new Greenfield capacity. On the September 28, 2007, at the Annual General Meeting the Board of Directors announced the decision to raise up to Rs425Cr by way of a rights issue, to partially fund the capacity expansion required by the business. The balance of funding will be through external debt and internal accruals. (ANI)

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