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Kingfisher beer manufacturer, United Breweries is planning to pump in about ₹350 crore as capital expenditure next year. The infusion is to meet the company’s expected volume growth in India. Also, UBL which is backed by the Dutch multinational brewing company Heineken is likely to pursue price increases due to offset cost impacts due to inflationary pressures.
In the latest conference call, Chief Financial Officer Radovan Sikorsky said that United Breweries has good CAPEX plans in place for its breweries to meet anticipated volume growth going into 2023.
Elaborating the CAPEX spend, the CFO told PTI that for the coming January to December the CAPEX spend that the company is looking at somewhere in the region of ₹350 crore. He added that they remain optimistic about the long-term growth of the industry. Also, he believes that evolving consumer trends will drive premiumization.
However, the CFO expects some inflationary shocks in the industry which is likely to prompt them in increasing prices.
He further told on the call that inflation pressure on the cost of goods sold will most likely continue in the foreseeable future and hence, they will continue to pursue further price increases to strengthen their earnings, in combination with cost measures to mitigate these cost impacts.
In the quarter ending September 30, 2022, UBL’s gross margin dipped by 508 basis points as compared to Q2FY22 due to continued inflationary pressures on costs, particularly on prices of barley and packaging material. Notably, the company’s CAPEX spend stood at ₹90 crore in Q2FY23 with continued volume growth.
The CFO also pointed out some softening on some of these components, but going forward it is still too early to comment on that.
Last month, UBL in its financial report said, “Inflationary pressure on costs is seen to continue in the foreseeable future, requiring the company to pursue price increases and drive cost management. UBL continues to remain optimitic on the long-term growth of the industry and evolving consumer trends driving premiumization.”
On the company’s outlook going forward, the CFO expects the company to continue to be positive about category penetration. At the same time, they will continue to drive shares in their premium portfolio and that is the key for them, he stated.
During the second quarter of FY23, the CFO revealed that UBL’s premium segment increased by 48% well ahead of the total portfolio which grew by around 23%.
Kingfisher remains the bread and butter for UBL. He said that they will continue doing strong activities around the Kingfisher brand.
Further, in Q2FY23, UBL recorded a growth of 8% in premium volumes with a strong performance in Heineken and Kingfisher Ultra.
As of September 30, 2022, UBL posted a consolidated net profit of ₹134.12 crore compared to a profit of ₹80.34 crore in Q2 of FY22. Revenue from operations stood at ₹3,673.51 in Q2FY23 versus ₹3,294.73 crore in Q2FY22.
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John Miller has been writing about science, gaming, and tech culture for over a decade. He’s a top-rated reviewer with extensive experience helping people find the best deals on tech and more.
