August 7 - Asia Pacific Breweries Ltd (APB) today announced its unaudited results for the third quarter ended 30 June 2008
3Q 2008
APB achieved very satisfactory results in the 3rd quarter. APBE reached S$42.5 million (up S$10.7 million or 34%); and PBIT increased 28% or S$17.4 million to S$78.7 million over the same period last year.
Excluding translation differences, gestation losses (i.e. the first 3 years' results from greenfield breweries in Laos, Mongolia and Hyderabad, India) and non-recurring items (i.e. a one-time recovery of business development expenses previously incurred on behalf of a Vietnam subsidiary), APBE increased organically by S$15.8 million or 54% to S$45.0 million; while organic PBIT reached S$88.7 million, up S$29.3 million or 49%.
YTD (9 months)
For the nine-month period ended 30 June, APBE grew about S$22 million or 20% to S$132.9 million; while PBIT reached S$247.7 million, up 18% or S$38 million from last year.
Excluding translation differences, gestation losses and non-recurring items, organic APBE rose 30% or S$32.6 million to S$142.3 million; while organic PBIT gained 28% or S$58.8 million to S$269 million.
Mr Koh Poh Tiong, Chief Executive Officer, APB said, "Building on the positive momentum in the 1st half of the financial year, very satisfactory results were achieved for the third quarter and nine-month period to 30 June. Turning in a sterling performance, our Indochina cluster (Vietnam, Cambodia and Laos) continued to lead, contributing some 43% of APB's total PBIT for the third quarter and nearly 50% for the nine-month period. Other growth engines included Papua New Guinea and Singapore. This positive trend is likely to flow into the remaining fourth quarter; and, barring any unforeseen developments, we expect our full year attributable profit (before exceptional items) to exceed that of last year."
MILESTONES
1) APB Now Wholly Owns APB Aurangabad in India
APB acquired the remaining 24% stake which it previously did not own in Asia Pacific Breweries (Aurangabad) Limited (APBA) on 31 July 2008, making it a wholly-owned subsidiary of APB.
APBA is actively gaining distribution in Maharashtra and beyond. Its beer brands, Cannon 10000 and Baron's Strong Brew, have enjoyed steady growth while Tiger was recently introduced as a local brew in April this year. With this portfolio of brands, APBA is poised to win over more consumers and capture further growth.
2) A New Brewery in Guangzhou Underway
15 May 2008 saw APB's joint venture company, Heineken-APB (China) Pte Ltd (HAPBC), through its wholly owned subsidiary, Guangzhou Asia Pacific Brewery Co. Ltd (GAPB) embarking on plans to build a greenfield brewery in Guangzhou, Guangdong.
When ready by end 2009, this greenfield brewery will supply the growing demand for Anchor, Tiger and Heineken in South China. Thereafter, HAPBC's brewery in Hainan, which currently supplies the beers to the South China markets, will refocus on further expanding its Hainan market where Anchor and Tiger are already choice brands there.
OUTLOOK
Barring unforeseen developments, the company expects to close the current financial year with a higher attributable profit (before exceptional items) than last year.
Operations Review (3Q 2008)
Papua New Guinea
PBIT jumped 52% due to higher volume, lower overheads and better margins from price increases. Sales volume grew 11%.
Indochina (Cambodia, Laos and Vietnam)
The region continued to perform strongly with sales volume and PBIT growing by 18% and 19% respectively. PBIT would have almost doubled if not for the gestation loss from Laos, translation losses arising from the weaker US dollar and Vietnamese Dong, payment of business development expenses and a reinvestment credit received last year.
Singapore
PBIT rose 9%. Despite stronger domestic and contract brew sales than last year, overall volume dipped marginally by 1% due mainly to a decline in export sales.
Malaysia
Sales volume grew 8%. PBIT gained by only 1% due mainly to a write-back of deferred tax provisions recognised in the same quarter last year.
New Zealand
Sales volume and PBIT slipped 2% and 52% respectively due to intensifying competition, suppressed pricing, higher distribution costs and translation losses.
Thailand
Volume grew 1% despite intense competition and increasing regulatory restrictions on the consumption and advertising of alcoholic products. PBIT fell 39% due mainly to timing of marketing investments.
China
Sales volume fell 23% mainly due to HAPBC's divestment of stake in Jiangsu Dafuhao Breweries and intense competition. Loss stood at S$2.8 million attributable to lower volume, shift in product mix and increases in material costs.
South Asia (India and Sri Lanka) and Mongolia
The Mongolian operation registered a small maiden profit for the quarter. Taking into account the investments in brand launches in Aurangabad (India), and gestation loss from Greenfield brewery in Hyderabad, Andhra Pradesh (India), the operations in South Asia and Mongolia incurred a loss of S$3 million.
Corporate Office
Corporate office registered a surplus for the quarter mainly due to a successful recovery of business development expenses previously incurred on behalf of a Vietnam subsidiary, timing of cost recovery of marketing expenses and lower marketing spend for the quarter.