13 February 2009

Asia Pacific Breweries Posts Healthy Attributable Net Profit in First Quarter

Asia Pacific Breweries Ltd (APB) today announced that attributable net profit (after exceptional items) for the Group rose 13.4% to S$48.3 million for the first quarter ended 31 December 2008.

Group profit before interest, tax and exceptional items (PBIT) stood at S$87.3 million, an increase of S$4.0 million or 5% over last year. Without factoring in translation difference and gestation losses*, PBIT rose 12% organically.

Attributable net profit before exceptional items (APBE) rose 2% or S$0.8 million to S$44.8 million. Excluding translation difference and gestation losses*, APBE increased organically by 12%.

Versus the same period last year, revenue increased 2.2% to S$580.2 million.

On the results, Mr Roland Pirmez, Chief Executive Officer, APB, said, “APB is heartened to post first quarter gains amidst a very demanding economic climate. We increased prices of our beers in several markets and coupled with enhanced volume, sales revenue improved by 2.2%. Attributable net profit enjoyed a healthy growth of 13.4% as we registered a one-time gain of S$3.5 million from the sale of Liquorland Limited in New Zealand. APB’s brewery operations in the Asia Pacific region have continued to actively participate in each market for greater volume and earnings. Amongst the best performing markets was Singapore which recorded an outstanding PBIT increase of 63% as compared to the first quarter last year. The result was attributable to an 8% gain in volume and improved margins. Similarly, Papua New Guinea’s PBIT also increased 37% as a result of a 6% volume rise as well as enhanced margins and an appreciation of the Kina.”

Reporting early gains was also Malaysia. As compared to the same period last year, Malaysia saw a 24% and 17% improvement in PBIT and volume respectively.

Indochina which comprises Cambodia, Laos and Vietnam recorded PBIT growth of 6%, owing to price increases and savings in overheads. Organically, PBIT would have grown 12%, had it not been for the gestation loss from Laos and translation difference arising mainly from the weaker Vietnamese Dong.

Defying stiff competition, New Zealand, Mongolia and South Asia which includes India and Sri Lanka, all saw volume boosted by 2%, 46% and 37% respectively.

“The current global financial crisis is unprecedented and we can expect the operating environment to remain challenging. Notwithstanding, APB has a strong balance sheet and the Group’s business fundamentals remain sound, given our diversified footprint in the Asia Pacific region; extensive portfolio of beer brands; as well as keen operational expertise. To emerge from the challenges, APB will continue to leverage our strengths for greater competitive advantage and exercise disciplined cost management, watching our operating costs and capital allocations very carefully,” said Mr Pirmez.

“As we address the short term challenges, APB remains focused on its long term vision. The Group will keep reviewing investment plans in light of the current environment and invest selectively to support future growth and boost our competitiveness,” added Mr Pirmez.

Operations Review

Singapore
PBIT grew 63% owing to an 8% gain in export, contract brew and domestic sales; as well as improved margins from price increases and lower overheads.

Papua New Guinea
PBIT gained 37% as a result of higher volume as well as enhanced margins from price increases and an appreciation of the Kina. Sales volume rose 6%.

Malaysia
PBIT rose 24% on the back of a 17% volume increase.

Indochina (Cambodia, Laos and Vietnam)
PBIT rose 6% due to price increases and savings in overheads. The positive PBIT gain was despite a 7% decline in volume in light of the current economic conditions. Organically, PBIT would have grown 12% had it not been for the gestation loss from Laos and translation loss arising mainly from the weaker Vietnamese Dong.

New Zealand
Overall, a higher volume of 2% was registered, driven mainly by the non-beer products such as the Ready-To-Drink brands. PBIT fell 46% as a result of a weaker New Zealand dollar, intense competition, higher duties and higher packaging costs. Excluding translation loss arising from the 25% decline in the New Zealand dollar, PBIT fell 28%.

Thailand
Volume and PBIT slipped 13% and 4% respectively due to the political unrest and regulatory restrictions on consumption and advertising of alcoholic products.

Mongolia
Volume grew 46%. A loss of S$3.1 million was incurred due to exchange losses on the US dollar loans, arising from the weakening Mongolia Tugrik against the US dollar. Excluding the impact from foreign exchange losses, there would have been a breakeven in PBIT, as compared to an operating loss of S$0.7 million for the same period last year.

South Asia (India and Sri Lanka)
Volume for South Asia improved 37%. Loss at S$3.4 million was mainly attributable to higher marketing expenses incurred in Aurangabad (Maharashtra, India); and gestation loss from greenfield brewery in Hyderabad (Andhra Pradesh, India) which commenced commercial operations in January 2008.

China
Volume slipped 18% mainly due to intense competition and exclusion of results from Jiangsu Dafuhao. A loss at S$6.1 million was mainly attributable to lower volume, foreign exchange loss, increases in raw material prices and higher marketing expenses.

Corporate Office
Corporate office registered a surplus for the quarter mainly due to higher royalty income, foreign exchange gain, lower overheads and lower marketing expenses.

*Gestation losses refer to the first three years’ results of greenfield breweries in Vientiane (Laos), Guangzhou (Guangdong, China) and Hyderabad (Andhra Pradesh, India).

Newsroom 2009 listing

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