June 15, 2016
Julian Francis, Commonwealth Brewery Limited Chairman
Commonwealth Brewery Limited (CBL), a company whose beer, wine and spirits products are connected to good times and light-hearted moments, served up serious news and optimism for shareholders at the company’s annual general meeting (AGM) June 8, reporting $123.5 million in revenue and $68 million in total assets while remaining debt-free.
Though the company’s financials were mixed, relatively flat revenue year-over-year and a decline in profits and earnings per share, the figures reflected challenges and corrections, including a one-time adjustment and were described as paling by comparison to the significance of “exciting” strategic plans to take the company forward.
CBL Chairman Julian Francis called the results “particularly impressive” given that the maker of Kalik and leading distributor of more than 200 brands had invested heavily in inventory after being named a supplier of choice for Baha Mar, an expense it could not fully retrieve following the multi-billion dollar resort project’s collapse in late June 2015 with its future still in limbo.
“Given the immediate stimulus and longer term support which this project had been expected to deliver to the economy including, of course, our sector, it is not an exaggeration to say that the impact of its delay has been wide-reaching and devastating,” said Mr. Francis. “In the midst of this, the worst hurricane ever to hit the southern Bahamas struck.” Additionally, the chairman noted, CBL took a one-time $3.7 million loss adjustment “dating back a number of years relating to pricing anomalies.”
While profits took a sharper dive from $18.2 million in 2014 to $11.8 million in 2015 as the company absorbed the cost of the new Value Added Tax in addition to the stalling of Baha Mar and much-need price and inventory corrections, both the chairman and CEO Hans Neven said CBL had used the year to make important strides in operations and marketing that will benefit shareholders for years to come.
“I am filled with optimism about our company,” said Neven. “That is because I feel the energy surging through every division of Commonwealth Brewery from manufacturing to marketing, from wholesale distribution to retail sales, from corporate responsibility to sustainability. Throughout 2015, a year of changes and a year I would describe as nearly perfectly meeting the qualifications for disruptive innovation, we have strengthened operations, distribution and delivery, inventory evaluation and management, payment solutions and processes and cemented relationships with customers, suppliers and communities.”
In 2015, the company expanded from 51 stores on nine islands to 55 stores on 11 islands, and added more than a dozen jobs. It currently employs 413 full-time persons. CBL also built on its strongest brand, Kalik, introducing Kalik Radler and Kalik Light Premium and it launched the 16-ounce can of Heineken, campaigning it as the beer “Born in Amsterdam, Raised in Paradise.” Both Kalik and Heineken as well as Coors are manufactured in the company’s 150,000 square foot plant at Clifton.
Among the most noticeable changes came at the end of the year as Commonwealth Brewery began the roll-out of its new branding, uniting all stores under its distinctive 700 Wines & Spirits umbrella.
Since going public in 2011, CBL has paid out $80 million in dividends and its share price has continued to climb from $8.33 at the time of the initial public offering to a high of $15.50 at year-end. Some 75% of the shares are held by Heineken NV and 25% by Bahamian investors including the National Insurance Board.
By Alex Dorsett
Source: Diane Phillips & Associates