Murree Brewery Company Limited was founded in 1860 and is based in Rawalpindi, Pakistan. It manufactures and sells alcoholic and non-alcoholic products in Pakistan and internationally. It is composed of three divisions: liquor, glass and tops division amongst which liquor is the most profit-making division. Below is a brief analysis of Murree Brewery's financial performance.
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COMPANY SNAPSHOT
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Name of company MURREE BREWERY COMPANY LIMITED
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Nature of Business Beverages
Ticker MUREB
Net Sales FY '10 Rs 2,578,533,000
Net Profit FY'10 Rs 315,329,000
Share price (avg. over Jul'09-Mar'11) Rs 87.50 per share
Market Capitalization as at 31st March 2011 Rs 1,429,772,604
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RECENT RESULTS (3Q11)
Gross sales of Murree Brewery in 3Q11 were at Rs 3,087 million increasing by 25.34% (previous Rs 2,463 million). Liquor, glass, and tops, all three divisions posting decent growth in their own accord to push the gross figure up. The company posted a gross profit of Rs 730.2 million increasing by 35.32% (9M10 Rs 539.6 million). Administrative expenses were in a check while the distribution expenses increased in line with rising fuel prices and aftermath of the floods that affected the distribution networks. Operating profit was at Rs 507.5 million increasing by 46.64% (9M10: Rs 346.1 million). Profit after tax was recorded at Rs 300.7 million increasing by 45.95% (9M10: Rs 206.1 million). Earning per share was recorded at Rs 17.36 (previous Rs 11.90).
Murree Brewery has diversified into the drinking water segment through acquisition. The new division by the name of Murree Sparkletts will surely add revenue to the company in the next fiscal year.
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Rupees in 000s 2009 2010 % Change
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TURNOVER 3,242,649 3,714,896 14.56
Duties and taxes 1,021,934 1,136,363 11.20
NET TURNOVER 2,220,715 2,578,533 16.11
COST OF SALES 1,591,385 1,777,770 11.71
GROSS PROFIT 629,330 800,763 27.24
Distribution cost 159,907 177,976 11.30
Administrative expenses 112,989 119,877 6.10
Other operating income 15,197 61,839 306.92
Other expenses 26,311 37,661 43.14
EBIT 345,320 527,088 52.64
Finance cost 4,466 2,507 -43.86
Profit before taxation 340,854 524,581 53.90
Provision for taxation 125,022 209,252 67.37
NET PROFIT 215,832 315,329 46.10
EPS 16.45 21.85 32.83
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The company showed a 16% increase in net turnover, from Rs 3.242 million in FY09 to Rs 3.714 million in FY10. However, the sales trend graph shows that 16% sales increase over FY09-10 was less than 30% increase over FY08-09. The company did not perform well in FY10 showing deficiencies in distribution system as well as impact of overall economic downturn.
The cost of sales increased by 11% from Rs 1.591 million in FY09 to Rs 1.777 million in FY10, indicating strong COGS management. The gross profit consequently increased from Rs 629 million in FY09 to Rs 800 million in FY10, registering a 27% increase. Distribution cost and administrative expenses increased by 11% and 6% respectively. Other income increased 307% causing EBIT to increase by 53% from Rs 345 million in FY09 to Rs 527 million in FY10.
Finance cost decreased by 44% due to retirement of short term running finance and consequent mark-up savings. However tax increased by 67% due to increase in current taxation, leading to an overall 46% increase in net profit from Rs 215 million in FY09 to Rs 315 million in FY10. This was reflected in 33% increase in EPS, from Rs 16.45 per share in FY09 to Rs 21.85 per share in FY10.
STOCK PERFORMANCE:
Stock returns volatility of weekly continuously-compounded returns shows that the standard deviation of these stock returns is 5.1%. The future stock returns are expected to vary with a standard deviation of 5.1%, showing the consistency and steadiness of stock returns.
Beta analysis results in a beta of 0.60 relative to a market beta of 1.00 as given by the slope of the trend line. This indicates stable stock returns based on a strong company bottom-line and sales growth. However, positive market conditions will not have a significant positive impact the performance of the company.
LIQUOR DIVISION
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Rupees in 000s 2009 2010 % Change
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TURNOVER 2,421,091 2,889,843 19.36
Duties and taxes 851,406 960,697 12.84
NET TURNOVER 1,569,685 1,929,146 22.90
COST OF SALES 1,029,449 1,265,476 22.93
GROSS PROFIT 540,236 663,670 22.85
Distribution cost 90,939 103,068 13.34
Administrative expenses 73,504 81,462 10.83
EBIT 375,793 479,140 27.50
Finance cost 4,580 1,620 -64.63
Profit before taxation 371,213 477,520 28.64
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Net turnover increased by 22.90% and cost of sales increased by 22.93%, leading to a 22.85% increase in gross profit from Rs 540 million in FY09 to Rs 664 million in FY10. This was reflected in 27.5% increase in EBIT. Finance cost pertaining to liquor division decreased by 64.63%, resulting in profit-before taxation increasing 28.64% from Rs 371 million in FY09 to Rs 477 million in FY10.
Production capacity of liquor division remained the same in FY10. Actual production of beer and non-alcoholic beverages and non-alcoholic products witnessed an increase of 22% and 3% respectively.
GLASS DIVISION
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Rupees in 000s 2009 2010 % Change
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TURNOVER 324,990 413,663 27.28
Duties and taxes 7,835 7,605 -2.94
NET TURNOVER 317,155 406,058 28.03
COST OF SALES 311,065 380,980 22.48
GROSS PROFIT 6,090 25,078 311.79
Distribution cost 1,672 1,860 11.24
Administrative expenses 13,397 15,610 16.52
EBIT -8,979 7,608 184.73
Finance cost 368 -592 -260.87
Profit before taxation -9,347 7,016 233.22
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Net turnover increased by 28.03% and cost of sales increased by 22.48% leading to an overall 311.79% increase in gross profit from Rs 6.09 million in FY09 to Rs 25.08 million in FY10. EBIT increased by 184.73% and finance cost decreased by 260.87%, thus leading to a 233.22% increase in profit before taxation, from loss of Rs 9.35 million in FY09 to a profit of Rs 7.02 million in FY10.
Glass melting capacity remained the same in FY10. However actual glass melted increased by 9.94%.
TOPS DIVISION
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Rupees in 000s 2009 2010 % Change
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TURNOVER 881,863 897,298 1.75
Duties and taxes 162,693 168,061 3.30
NET TURNOVER 719,170 729,237 1.40
COST OF SALES 644,101 617,222 -4.17
GROSS PROFIT 75,069 112,015 49.22
Distribution cost 67,296 73,048 8.55
Administrative expenses 20,626 22,805 10.56
EBIT -12,853 16,162 225.74
Finance cost 402 295 -26.62
Profit before taxation -13,255 15,867 219.71
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