United Breweries says no policy change expected due to Maharashtra elections
United Breweries Ltd (UBL) reported Q4 revenue in line with estimates but a decline in gross margins and higher employee cost and other expenses impacted EBITDA and profits. UBL didn't come out with any quarterly volume growth.
United Breweries Ltd (UBL) reported Q4 revenue in line with estimates but a decline in gross margins and higher employee cost and other expenses impacted EBITDA and profits. UBL didn't come out with any quarterly volume growth.
Managing director Shekhar Ramamurthy said, “Volume growth was about 10 percent but what had a big impact in Q4 and we see that impact continuing into this year is the price of input material is going up namely glass bottles."
With prices about 15-20 percent higher than last year and there is a shortage of domestic barley, the company had to import barley which is an even higher price than domestic barley. So input prices pressure is going to be very high, was high in Q4 and it will continue to be high this year, he said.
In terms of margin outlook, he added, “This year is going to be difficult because in our business pushing prices is very difficult, most state governments don’t allow price increases and there is a margin pressure but we are hopeful that we will be within the ballpark that we have had in the last couple of years in terms of margins and we are cautiously optimistic that even the demand will pick up from Q3 onwards.”
Ramamurthy said Andhra Pradesh chief minister's comment regarding liquor ban is a cause of worry as AP is a very important market not just for UBL, but for most consumer products in India. "We are hopeful that the government will not take a drastic step. We, as beer industry, are willing and happy to engage with the government to find a way - we can work with the governments to ensure that the ill effects of excessive consumption, abuse of alcohol by a poorer member of society is controlled," he added.
In terms of Maharashtra state elections, Ramamurthy said, “Maharashtra elections are unlikely to have any impact on the business. The election period will have an impact because of closures and restrictions on hours of production and dispatch but we don’t see any policy impact.”
First Published: May 28, 2019 2:36 PM IST
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