Red Stripe posts 5% increase in net profit
Local brewer Red Stripe posted net profit of $126 million, for its third quarter ended March 31, 2011, which was five per cent higher than year-earlier levels.
Weakness in the domestic alcoholic drinks market continued to have an adverse effect on its domestic volumes and revenues, and even with a six per cent rise in the value of net export sales, net sales value declined by two per cent from year-earlier levels to $2.46 billion.
The brewer managed to lower its cost of sales during the third quarter by five per cent from the comparative period in 2010 to $1.75 billion in the review quarter.
“The business continues to focus on reducing production costs to offset the negative impact of the lower volume base,” said the directors’ statement which accompanied the financials.
General, selling and administration costs of $270 million were substantially higher for the third quarter compared the corresponding period last year “but due only to the relative timing of annual expenses incurred”.
Consequently, trading profit for the third quarter was $189 million, representing a 45 per cent increase over the compative period last year, which was mainly due to the timing of marketing expense in the quarter versus last year.
However, on a year to date basis at the end of the third quarter, the total marketing spend was 18 per cent higher than the same period last year, which is a main contributor to the trading profit decline of 24 per cent for the first three quarters compared to last year.
Similarly, earnings per share for the nine months ending March 31, 2011 were 15.86 cents vs 22.96 ents for the same period in the prior year.
“Given the decline in earnings per share, no dividend was paid for the first nine months compared to a dividend of 15 cents in December 2009. The Directors of the company are actively engaged in exploring alternatives to improve the company’s performance and these will be communicated to the shareholders and the public in the coming months,” said the directors’ statement.