09 May 2008

APB Reports Strong Attributable Net Profit Before Exceptional Items Growth of 14% for 1H 2008

Asia Pacific Breweries Ltd (APB) closed its first half of the financial year ended 31 March 2008 on a strong note. Versus the corresponding period last year, Group Profit before Interest and Taxation (PBIT) grew 14% or S$20.4 million to S$169.0 million. Excluding translation difference and gestation losses*, PBIT rose organically by 19% to S$179.5 million.

Attributable Net Profit before Exceptional Items (APBE) stood at S$90.4 million which is 14% or S$11.2 million higher than the same corresponding period last year. Without taking into account translation difference and gestation losses*, APBE grew organically by 20% to S$96.8 million.

Group revenue for the same period increased by 14% to S$1.06 billion.

Earnings per share before exceptional items rose from 30.7 cents to 35.0 cents.

The Directors have recommended an interim dividend of 14 cents per share, 1 tier tax exempt, to be paid on 10 June 2008.

Mr Koh Poh Tiong, Chief Executive Officer, APB said, "Our results were very satisfactory and demonstrated the resilience of our core business in the face of pressures from severe competition and significant increases in raw material prices. As a cluster, IndoChina (Cambodia, Vietnam and Laos) continued to be the star performer, accounting for some 52% or more than half of the Group's PBIT, followed by Oceania (New Zealand and Papua New Guinea), contributing some 39%. I am particularly pleased that Singapore achieved a 4% increase in domestic sales in a largely mature market. This showed that, with the right strategies, our wide portfolio of complementary brands are winning over consumers in Singapore despite the plethora of competitive brands jostling for a share of throat. Overall as a Group, positive momentum has been created and we will continue building on it. "

Indochina would have achieved a PBIT growth of 31% (instead of 21%) if not for the gestation loss from Laos as well as translation difference arising from the weaker US dollar and Vietnamese Dong. Compared to the same period last year, volume for the region grew 16%.

New Zealand recorded a credible PBIT increase of 9% on the back of a 3% rise in volume, favourable sales mix and the appreciation of the New Zealand dollar.

PBIT for Malaysia and Papua New Guinea grew by 7%. The former registered an 11% volume growth while the latter generated 8%.

Volume in Mongolia rose significantly while South Asia (India and Sri Lanka) reported a 28% gain over the same period last year. In Thailand, volume rose 2%, despite intense competition and increasing regulatory restrictions on the consumption and advertising of alcoholic products.

China reported a loss of S$7.3 million during the period under review caused by intense competition, increases in raw material prices and losses at Kingway Brewery Holdings Ltd (Kingway) in which APB's associated company, Heineken-APB (China) Pte Ltd holds a 21% stake. For the financial year ending December 2007, Kingway reported a HK$23.57 million (about S$4.1 million) loss.

OUTLOOK

APB will continue to invest in existing and new markets to secure long term and sustainable profitability. Barring unforeseen developments, APBE for the full year is expected to be higher than last year.

Key Developments

1) APB Opens New Brewery in Laos
On 12 March 2008, APB commissioned its S$49 million greenfield brewery in Vientiane, Laos. It is the second brewer to be granted a beer investment licence by the Government of Laos.

The new 300,000-hectolitre state-of-the-art brewery occupies a 13-hectare site at Ban NongNo, Veunkham Road in Xaythany District. Currently, the brewery produces Tiger for the Lao market and it will gradually introduce other beer brand(s) to offer greater choice to the consumers there.

2) APB Expands Brewery in North Vietnam
26 March 2008 saw APB expanding the production capacity of its wholly-owned brewery located outside Hanoi in North Vietnam. The move was made to cater to the strong domestic and export demand for its beers in the market.

Having increased its production capacity by more than 50% to 460,000 hectolitres, the brewery is now more adequately equipped to meet rising demand for Tiger, Heineken, Anchor and Bivina that it brews for the Vietnamese market.

3) India Introduces 1st Locally-Brewed Tiger
16 April 2008 marked the launch of the 1st India-brewed Tiger in Mumbai - through our brewery in Aurangabad in the state of Maharashtra; making India the 10th country to brew the award-winning beer.

Our Aurangabad brewery will first establish a significant presence for Tiger in Mumbai before gradually rolling-out the brand to other parts of India. To further tap the growing Indian beer market which registered an estimated 10.8 million hectolitres in March 2007, plans are underway to take Tiger to northern India, starting with New Delhi before entering the south Indian market via Andhra Pradesh, through both our breweries in Aurangabad and Hyderabad.

Operations Review (YTD 6 Months)

Singapore
PBIT grew 29%. This was attributable to an 8% volume increase in domestic, export and contract brew sales.

Indochina (Cambodia, Laos and Vietnam)
The region reported a 21% rise in PBIT owing to a 16% increase in volume and synergies realised from the alignment of its operations in South Vietnam. Excluding the gestation loss from Laos and translation difference arising from the weaker US dollars and Vietnamese Dong, PBIT would have grown by 31%.

New Zealand
PBIT grew 9% while volume rose 3%. The positive result was due to favourable sales mix and the appreciation of the New Zealand dollar. Excluding translation gain, PBIT grew organically by 4%.

Malaysia
PBIT rose 7% which grew on the back of an 11% increase in volume.

Papua New Guinea
PBIT gained 7% due to improved margins from price increases and volume growth of 8%.

Thailand
Volume increased by 2% amidst the intense competition and regulations which restricted consumption and advertising of alcoholic products. PBIT rose 20% due to higher sales and lower marketing investments.

China
Volume dipped marginally. Losses stood at S$7.3 million due to intense competition, shift in product mix, increases in raw material prices.

South Asia (India and Sri Lanka) and Mongolia
Losses from Sri Lanka, India and Mongolia stood at S$5.6 million due to investment in brand launches in Maharashtra, India; and gestation losses from greenfield breweries in Hyderabad (Andhra Pradesh, India) and Ulaanbaatar (Mongolia).

Corporate Office
Corporate expenses incurred were higher mainly due to higher marketing investments.

*Gestation losses refer to the first three years' performance of greenfield breweries in Vientiane (Laos), Ulaanbaatar (Mongolia) and Hyderabad (Andhra Pradesh, India).

Newsroom 2008 listing

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