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Asia Pacific Breweries profits up 39% in Q3

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Asia Pacific Breweries Records Attributable Net Profit Gains of 39% for Q3 2009

  • Attributable net profit after exceptional items (ANP) grew 39% or S$14.5 million to S$51.9 million
  • Group profit before interest and tax (PBIT) rose 2% to S$80.6 million

3Q 2009
Asia Pacific Breweries Ltd (APB) today announced an attributable net profit after exceptional items (ANP) of S$51.9 million for the third quarter ended 30 June 2009. This represents an increase of 39% or S$14.5 million over the same period last year, due to an exceptional gain of S$11.1 million arising from a compensation fee derived from the termination of a business development project.

Versus the same quarter last year, Group profit before interest, tax and exceptional items (PBIT) grew S$1.9 million or 2% to S$80.6 million; while attributable net profit before exceptional items (APBE) declined by S$1.7 million or 4% to S$40.8 million. Without factoring in translation differences and gestation losses*, PBIT and APBE fell organically by 4% and 14% respectively.

Group revenue for the period stood at S$480.9 million, 2% higher than last year.

YTD (9 months)
For the nine-month period ended 30 June 2009, PBIT increased S$5.4 million or 2% to S$253.1 million while APBE slipped marginally by S$1.1 million or 1% to S$131.8 million. Excluding translation differences and gestation losses, PBIT and APBE improved organically by 3% and 1% respectively.

ANP rose S$22.8 million or 18% to S$146.4 million due to an exceptional gain of S$14.6 million. The exceptional gain was attributable to a compensation fee derived from the termination of a business development project; and gain on the sale of Liquorland Limited, a chain of liquor retail stores in New Zealand.

Revenue for the first nine months stood at S$1.5 billion, an increase of 1% as compared to last year.

Mr Roland Pirmez, Chief Executive Officer, APB said, “Our performance in the third quarter is in line with our expectations at such a time of uncertainty. There were many challenges in almost all our markets and stiff competition was prevalent. Despite this, group revenue inched 2% upwards due to price increases and volume improvements in several markets, owing to concerted brand driven activities. Combined with tighter cost control measures, many of these markets saw their PBIT levels improve significantly. In particular, Malaysia, Papua New Guinea, Indochina and Singapore registered double-digit PBIT gains of 49%, 28%, 26% and 12% respectively.”

“With uncertainty in the global economy impacting the markets in which we operate, the group expects trading conditions to remain challenging, particularly in New Zealand. APB will continue to optimise its brand portfolio to compete effectively amidst the difficult economic environment and capitalise on the varied consumer needs and trends as well as tighten control on operating costs,”added Mr Pirmez.

Operations Review (3Q 2009)

Malaysia
PBIT rose 49% due to a 10% volume gain and lower overheads.

Papua New Guinea
PBIT increased 28% as a result of a 6% volume growth, better margins from price increases and appreciation of the Kina. Excluding the effect of translation gain, PBIT grew 20%.

Indochina (Cambodia, Laos and Vietnam)
PBIT rose 26% and this was attributable to price increases and lower marketing expenditure. The region’s volume grew marginally by 2% despite the current weak economic conditions. Excluding gestation loss from Laos and translation gain, PBIT grew 22%.

S

million

S

million

This Year

Last Year

% Growth

PBIT (as announced)

42.8

34.0

25.9%

Add:
Gestation Loss

2.3

2.3

Less:
Translation Gain

0.8

Adjusted PBIT

44.3

36.3

22.0%

Singapore
PBIT grew 12% on the back of a 1% volume increase as well as savings in overheads and lower spend on marketing activities.

Thailand
PBIT improved 18% due to lower overheads. Volume declined 20% due to the prevailing
market conditions from political unrest and regulatory restrictions on the consumption and
advertising of alcoholic products.

China
PBIT stood at S$2.7 million, turning around from an operating loss of S$2.8 million recorded
for the same quarter last year, as a result of a 30% volume growth and lower marketing
expenditure.

Mongolia
PBIT recorded a gain of S$2.4 million. This was mainly due to an unrealised foreign exchange gain arising from the currency realignment of US dollar loans that stemmed from the strengthening of the Mongolia Tugrik against the US dollar for the quarter. Excluding the impact from the foreign exchange gain, PBIT stood at S$0.2 million. Volume grew 1%.

South Asia (India and Sri Lanka)
Volume for South Asia increased 26%. Losses were pared down to S$1.4 million due mainly to lower marketing expenditure and overheads.

New Zealand
Volume slipped 16% due to the increasingly challenging market conditions there brought about by intense competition and falling consumption in the shrinking beer market. In addition, poor sales mix as consumers down trade, higher packaging material costs and an unrealised exchange loss from the revaluation of forward contracts led to a loss of S$5.4 million. Excluding a translation gain and the unrealised loss from the revaluation of forward contracts, PBIT loss is pared down to S$1.0 million. Informatively, the year-to-date unrealised exchange loss from the revaluation of forward contracts is approximately S$1.0 million.

Corporate Office
Corporate office expenses rose due to higher marketing expenses and a recovery of business development expenses incurred on behalf of a Vietnam subsidiary last year.

Gestation losses refer to the 1st 3 years’ results from greenfield breweries in Laos, Guangzhou (Guangdong, China) and Hyderabad (Andhra Pradesh, India).

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