Lion Brewery sees volumes dip for full year

Lion Brewery PLC saw its fourth quarter (4Q24) revenue improve, both from the corresponding year and quarter before. However, the volumes declined for the full year.
The entity saw its revenue for the quarter ended on March 31 expand 24.4 percent to Rs.30 billion. When compared with 3Q24, the revenue grew 14.9 percent.

Lion Brewery recorded earnings of Rs.1.92 billion, which is a 76 percent growth year-on-year. However, from 3Q24, the earnings dropped 11 percent.
The entity pointed out that the economic pressures continued during the quarter under review. The excise taxes increased by 14 percent on January 24, which was on top of a 20 percent duty hike in July 2023, for the 23/24 financial year. The Value Added Tax was also higher by 3 percent versus the prior year quarter. 

“The escalation in the price of alcoholic beverages has brought further pressure to the consumers who have seen a rapid deterioration of their disposable income, which has led to the widespread availability of illicit products,” Lion Brewery said in a statement that accompanied the financial results.
Consequently, the company volumes declined for the full year. 
Lion Brewery stressed that the government and regulator must take into consideration the scenario and provide price stability for the industry to recover. 

“If this level of excise increases continues, the government revenue will be impacted due to the lower volumes,” it cautioned.
In an effort to support consumer affordability, Lion Brewery launched the 500ml returnable bottles from Lion Strong and Carlsberg Special Brew, at a lower price threshold. The objective was to minimise the consumers downtrading to illicit products. 

Meanwhile, the entity said the cost saving initiatives were a central focus to offset the adverse impacts of tax hikes on the company’s profitability. 
“However, there is a limit to cost reduction before quality and other critical elements are impacted. The outlook for 24/25 is in keeping with the 23/24 – volume and margin pressure,” it said.

In addition to an excise duty hike in January 2025, Lion Brewery said it expects there to be a margin headwind, in the event of a rupee depreciation in the second half of the financial year. 
Furthermore, the national elections in the second half of the year are also expected to increase uncertainty. 
Total taxes paid to the government during the fiscal year amounted to Rs.73.5 billion.