TURKEY: Efes delivers strong full year
Efes Breweries International (EBI) today announced strong full year profit growth as the company benefited from advances in sales revenues and volumes and offset rising pressure from costs.
EBI's consolidated sales volume reached 13.3m hectolitres in 2007, by growing 13.8% over the previous year. On a like-for-like basis, volumes increased 17%.
Net sales revenue, meanwhile, reached US$ 836.2m by increasing 30.9% over the previous year. The increase in net sales revenue, which was ahead of volume growth, was mainly attributable to local currency price increases in all of EBI's operating markets in 2007, the company said.
It added that it also benefited from the positive packaging mix stemming from the switch from returnable bottles to non-returnable bottles in Kazakhstan as well as by the positive foreign currency effect, due to the strengthening of local currencies in its operating geographies against USD, EBI's reporting currency.
"We are happy to deliver strong top line growth and improved EBITDA profitability in a challenging 2007, through the disciplined execution of our strategy in our operational geographies while effectively managing our cost base" said Alejandro Jimenez, CEO and chairman of EBI. "Looking ahead, we will continue to focus on our growth with a close eye on our cost base to continue delivering satisfactory results in an even more challenging 2008."
EBI said its consolidated gross profit increased by 20.7% over 2006 and reached US$ 374.1 million in 2007. However, gross profit margin contracted from 48.5% in 2006 to 44.7% in 2007.
"The contraction is primarily due to the global increase of malt and malting barley prices and also the negative impact of packaging mix in Kazakhstan," the company said.
It added that it was looking at ways to increase the aggregate capacity of its malteries in Russia and become self-sufficient in the supply of this raw material.
In 2007 EBI's profit from operations increased by 45.4% over the previous year and reached $80.6m. Consolidated EBITDA increased by 38.5% over the previous year and reached $156.0m. Consolidated EBITDA margin also increased from 17.6% in 2006 to 18.7% in 2007.
EBI's net income increased by 81.8% in 2007 compared to 2006 and reached $37.5m. In addition to better operating profitability, lower net interest expenses as a percentage of net sales revenue despite higher level of indebtedness positively affected the net income.
Looking forward, the company said: "We expect 2008 to be another challenging year, primarily as a result of worldwide input cost inflation. The impact of the increase in the raw material and packaging costs will be apparent at the gross profit line, while we expect to offset this negative impact to a certain extent by price increases ahead of inflation and our increasing operational efficiencies. These efficiencies are expected to be derived primarily from the optimization of marketing expenses due to our now completed brand rationalization in Russia and economies of scale.
"In 2008 we plan to deliver an absolute EBITDA growth albeit with a lower margin primarily as a result of timing differences between our expected price increases and cost reduction initiatives versus the increase in raw material costs and therefore such reduction in profitability may vary quarter on quarter.
"We expect to once again outperform the markets where we operate in 2008 with revenues increasing ahead of sales volume."
Efes Breweries International has said net profit halved in the first six months of this year, despite strong revenue gains in the key Russian beer market....
Efes Breweries International has reported a lift in sales volumes for the first half of this year....
Efes Breweries International has secured a US$40m loan for its operations in Kazakhstan....
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