Lion Brewery 1Q sales below potential but higher than last year’s

Lion Brewery (Ceylon) PLC managed to sustain its revenue in the three months to June (1Q22), despite recording “zero sales” for 30 days, due to a month-long lockdown. The largest brewer in the country generated sales of Rs.10.6 billion in the April-June quarter, up 63 percent from the same period, last year.

“For 30 days the operations of the company were at a complete standstill, due to the lockdown that was imposed to control the spread of the third wave of the pandemic. All liquor outlets were closed during this period, resulting in zero sales for the company,” the company said in an earnings release. 

“Comparatively, the lockdown during 1Q 2020 was 43 days, which included the peak selling festive month of April, whereas this year, the closures were during the latter part of May and the first three weeks of June. As a result of this, an improved turnover was recorded during 1Q 21/22, compared to 1Q 20/21,” the company added.

The June quarter sales were however down by about 28 percent, from Rs.14.8 billion in sales reported in the previous three months ended in March.

The company said the exports soared by 171 percent in rupee terms and 152 percent in dollar terms between the two periods, partly fuelled by the pandemic impact on international sales in the last year’s period. 

The company does not provide sales figures for domestic and international markets separately. 
The company also had faced operational challenges in areas of distribution and sales in other areas where sporadic isolations were imposed from time to time. 

The company also faced increased raw material costs and freight costs, the two challenges that are common to companies operating in many sectors in the aftermath of the worst of the pandemic last year, as the pandemic created strains on the supply chains and logistics. 

The direct costs of the company rose by 60 percent to Rs.8.5 billion from the year ago period. 
As an additional safety measure, the company said it also maintained a high level of inventory to ensure continued production and supply. 

The company had an inventory worth of Rs.3.4 billion by June-end, roughly at similar levels to March-end. 
The company reported earnings of Rs.7.63 a share or Rs.610.3 million for the April-June period, compared to earnings of 91 cents a share Rs.72.5 million in the corresponding period last year. 

The company pins hopes on the current rapid vaccination drive to result in economy regaining normalcy in the ensuing period of its financial year, which will help it to return to its full potential in sales and profits.  

By end-June, Ceylon Beverage Holdings PLC held a 52.25 percent stake in Lion Brewery while Carlsberg Brewery Malaysia Berhard had a 25 percent stake, being the company’s second largest shareholder.