J$1b profit for Red Stripe despite flat sales
Published:Wednesday | August 31, 2011 | 12:00 AM
Sales of beers, stouts and spirits remained flat for Red Stripe Jamaica due to what company officials said was the difficult economic environment and a domestic alcoholic drinks market still in contraction.
Red Stripe's fourth quarter sales rose a modest three per cent to J$3 billion at June 30. Sales for the year were close to flat, dipping marginally by 0.45 per cent from J$13.33 billion to J$13.27 billion.
The company has attributed the sluggish sales to what it described as the discriminatory Special Consumption Tax (SCT) regime. The company's excise tax bill dipped marginally from J$2.23 billion to J$2.12 billion in line with falling sales.
Its bottom-line profit was more resilient. After tax profit of J$570 million for the fourth quarter was up 299 per cent from the J145 million recorded during the corresponding period in 2010, according to the company's latest financial report filed with the Jamaica Stock Exchange.
Profit for the year topped J$1 billion or 29 per cent ended higher than the $789 million made last year. This translated to earnings per share of 36.16 cents, compared with 28.10 cents in 2010.
The report, signed by chairman Richard Byles and new managing director Renato Gonzalez, who joined the company in July, said that although profit was robust in the fourth quarter, this was attributable to a reduction in marketing spend compared to 2010 when marketing was up to support the launch of Red Stripe Light in the United States.
Marketing expenditure was inflated by J$190 million to support the launch.
For the last quarter, marketing expenses of J$262 million was down 43 per cent relative to the corresponding period in 2010.
"As a consequence, the trading profit for the fourth quarter was $778 million which is a 299 per cent increase versus the same period last year," said Byles and Gonzalez. Trading profit for the previous year was $195 million.
Red Stripe's annual spend on marketing in 2010 was J$1.5 billion. It dropped to J$1.48 billion in the 2011 period.
Yearly general, selling and administrative expenses at J$1.25 billion were 10 per cent higher when compared with the previous annual period, but was in line with inflation, the company said.
A billion-dollar increase in retained earnings also boosted the brewery and beverage company's net asset value from J$6.68 billion to J$7.73 billion.