Commonwealth Brewery Reports $5 Million Increase in Net Earnings

Mon, Jun 10th 2013, 01:30 PM

In the fifth year of recession with a still nervous, if slowly recovering economy, Commonwealth Brewery executives credited increased beer sales, broader retail appeal through store upgrades and greater operating efficiencies with driving net earnings up by $5 million over the previous year and allowing the leading spirits, wine, beer and beverage company to share profits with some 3,000 Bahamian shareholders.

The positive report -- issued with a warning flag about increases in the cost of doing business -- was presented to a packed house during the company's annual general meeting (AGM) June 4 at the British Colonial Hilton.

"The budget, as announced last week by the government of The Bahamas is likely to have a significant impact in our business," said Managing Director Nico Pinotsis. "Next to an increase of excise duties on spirits, we are confronted with an increase in business license as well as customs stamp tax."

Pinotsis said analysts had estimated the increase in costs would run about $2.5 million annually.

"The impact of this on our sales volume will still need to be determined as it will make our company even more sensitive to parallel trade and make the playing field even more uneven," said the Managing Director, who said the company was in the "process of liaising with government, to see what measures can be taken to mitigate this as much as possible."

The meeting reflected Commonwealth Brewery's annual report-- Celebrating for all the right reasons -- marking the coinciding of 140 years of Heineken, 25 years of Kalik and 40 years of independence for the Bahamas.

"In preparing to celebrate the brands and the business that make up Commonwealth Brewery Limited, a BISX-listed company with more than 3,000 local shareholders, I am also pleased to remind shareholders of the depth and strength of our company," said Chairman Julian Francis. "The business of Commonwealth Brewery incorporates a 150,000 square foot brewery at Clifton Pier, the wholesale distribution of beer, wine and spirits and the network of the largest liquor chain in The Bahamas, comprised of 54 stores from the northernmost island to near the southernmost point." Francis cited the variety of brands produced by the brewery, the portfolio of Kalik brands -- Kalik, Light, Gold and Lime -- Heineken and Guinness beers, Vitamalt, a full range of Ron Ricardo rums and Ole Nassau. Commonwealth Brewery also represents 70-plus labels of spirits and wines sold in its stores.

That combination of products that quench the thirst, tight control over operating expenses, including maximizing green energy and sanitation efforts, led to a spread sheet that was all the more impressive because of current economic conditions. Sales volume totalled 194,000 hectoliters or some 656 million fluid ounces of spirits, beer and wine during 2012. Revenue stood at $118 million, up more than $5 million from 2011, earning per share increased $.06 per share from $.58 to $.64, and the company with 381 employees paid dividends of $17.4 million.

Commonwealth Brewery also announced that it had passed the 100 million mark in bottles it had recycled and was now recycling well above half of all the beer bottles it uses.

"Commonwealth Brewery Limited is the only business in the industry that is publicly traded, sharing profits through dividend payouts across a wide cross-section of our community, and contributing importantly to the ownership by Bahamians of a piece of the economy," said the Chairman. "We know that there is still a lot of work to be done before the economy rebounds and we can use the other 'r' word -- robust, instead of recessionary -- but we believe we are beginning to turn the corner and because of our hard-working, dedicated team, our directors and the support we receive from Heineken that guarantees we will always be held to the highest world standards, we have reason to celebrate."

Managing Director Nico Pinotsis echoed Francis' sentiments, focusing on the operations that are driving the success story.At Commonwealth Brewery, we believe it is important to create a balance between people, profit and planet," he said. "It is key that long term growth should come in a responsible way "For us," he said, "paramount in our operations is our reduction of energy, water and waste while optimizing production efficiencies. Environmental sustainability is a huge platform and we are proud that we were able to increase our recycling rate at the company's recycling plant by 12% this year while decreasing non-recycled industrial waste and CO emissions."

Pinotsis also pointed to Kalik and other brands' support of Junkanoo, regattas and Bahamian culture, sports and education.

"We were able to do all of this and remain debt-free," he said. "That, in any economy, is worth celebrating. So today as we prepare for the nation's 40th anniversary of Independence, we mark 140 years of Heineken, 25 years since the first Kalik rolled off the conveyor belt and our second year with you, our shareholders, as partners in this venture, we are very proud, indeed and we pledge to do all we can to serve up the same positive type of news for the year 2013."

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