Commonwealth Brewery Limited is cautiously optimistic about its financial prospects for 2013 and beyond, however the proposed introduction of a value added tax and a potentially tougher competitive environment down the road are challenges that need to be addressed, according to Nico Pinotsis, the brewery's president and managing director.
"The announced introduction of a value added tax by government in 2014 will require careful management, if severe price disruption to our domestically manufactured as well as our imported products is to be avoided," said Pinotsis in the brewery's 2012 annual report. "We will seek to collaborate closely with government in this regard."
Pinotsis noted that competition is increasing via a jump in parallel imports due to a more fragmented spirits and wine market. "We will have to step up efforts to defend our position as the supplier of choice... that means we need to continue to earn brand preference among consumers by satisfying existing customers, wholesale and retail, and by winning new customers. We will continue to focus on these objectives in our marketing programs and all our operating processes."
In 2012, the brewery's revenue increased by $5 million in comparison to 2011, largely driven by the volume growth of its beer sales in the domestic market. Net income for the period was $19.3 million or 64 cents per share, a growth of 11.5 percent in comparison to 2011. Local consumption grew from 2.08 million nine-liter cases in 2011 to 2.16 million nine-litter cases in 2012. The brewery's beer portfolio contributed significantly to this volume growth, which also benefited from higher tourism arrivals especially in the first quarter of 2012, as well as a higher number of activities locally. The revenue growth is particularly noteworthy as the firm's operating expenses increased by $2.1 million in the period.
"The costs of input materials continued to rise in 2012. Excise tax paid increased due to higher beer sales. Costs in general, however, were well under control. Operating expenses as a percentage of revenue improved slightly from 86 percent to 84 percent," noted Pinotsis in the report.

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