Sales climb at Red Stripe
Desnoes & Geddes Limited, which trades as Red Stripe Jamaica, racked up sales of $6.66 billion at half-year, amid ramped up marketing of the brands it distributes and launch of a new beer flavour.
The company will pay dividend of 13 cents per share on these results.
Red Stripe spent $653 million on marketing in the run-up to the holiday season, compared to $497 in the previous period. The near one-third increase helped to push export sales 14 per cent higher and grow domestic sales by 10 per cent in the six-month period ending December 2014.
”These results demonstrate the continued resurgence of the group’s performance over the last few years. I am very pleased that the interventions we have made on our three strategic priorities, investing in our brands, generating profitable export growth and driving end to end efficiencies have put the business on a more positive trajectory,” said General Manager Cedric Blair in a company issued statement.
The increased marketing costs were partly in support of the launch of a new flavour of beer, Red Stripe Sorrel.
Alongside its flagship Red Stripe beer, the company also distributes Guinness, Heineken, Smirnoff and Johnnie Walker on behalf of parent company Diageo Plc, among other brands.
Overall, sales grew by 12 per cent on average at half-year, while net profit of $1.15 billion, on the face of it, underperformed last year’s $1.95 billion results - a 41 per cent decline.
However, last year’s results include a one-off gain of $970 million from disposal of assets – a five per cent stake in Brasserie Nationale d’Haiti and 10 per cent of Windward and Leeward Brewery Limited.
The results, when discounted for the disposal of the investments, indicates a moderate five per cent increase in pretax profit, even after accounting for its share of losses from its joint venture investment. Red Stripe took a $83 million hit compared to a gain of $417,000 at HY2013 from distribution company Celebration Brands Limited, in which it is a joint venture partner with Pepsi-Cola Bottling Jamaica Limited.
Red Stripe also reported solid growth in operating profit of $1.63 billion compared to $1.47 billion the previous period, despite growth in production costs, marketing expenses, and selling and administration charges.
Finance director Bruce Kidner said mid-line profit was driven largely by improved sales in the Jamaican market.
Amid a restructuring of its beer brewing recipe and its investments in production of cassava, among other upgrades, Red Stripe doubled its capital expenditure to $980 million in the period. Chairman Richard Byles said the company is now ready to launch into phase two of its modernisation programme.