Murree Brewery Company Limited (MUREB) is the oldest Pakistani firm. The company has accumulated more than 150 years of brewing experience. MUREB was founded in 1860 and is based in Rawalpindi, Pakistan. The British - who had established this brewery in 1860 in Ghora Gali, Murree - sold its majority shares to the renowned Bhandara family. Now, the third generation is running the firm, and the brewery is listed on the KSE.
It manufactures and sells alcoholic and non-alcoholic products in Pakistan. The company has three divisions, liquor, glass and Tops division that makes juices etc, amongst which liquor is the most profit making division.
FY12: Over the years, Murree Brewery has given a steady result for its shareholders, and the pattern slowed down in FY12. The company posted a 10 percent increase in its revenue for the year. The increase in revenue from Rs 3,350 million in FY11 to Rs 3,691 million in FY12 also helped the company to fatten its profits. However, the bottomline of the company increased by a mere 1 percent during the period from Rs 520 million to Rs 525 million in FY12. The company faced the higher cost of doing business during the period and since the company was unable to pass the price increase completely to the consumer the margins for FY12 slipped by 200 basis points.
The topline of the company consisted of liquor, glass and Tops drinks. The liquor division that has always been a top performing segment of the firm contributed Rs 2,675 million to the firm's topline, a growth of 8 percent over FY11. In terms of operating profit, liquor contributed Rs 684 million, a 3 percent decrease on year-on-year basis. Murree Brewery had to increase the prices of liquor during the financial year because the Punjab Excise Department levied excise duty on the purchase of rectified spirit in June 2011. The company accepted it with the corresponding increase in the selling price of liquor. The increase in the prices adversely affected the sale of the liquor because no other brewery in the nation had to pay the same duty. The brewery also invested Rs 150 million in its liquor plant; that would pay them in the future. The company invested Rs 13.4 million during this period in its glass division, and the division contributed Rs 39 million in the operating profit of the company, a 6.52 percent increase over FY11. On the other hand, Tops segment lost profits due to higher operating cost even though it saw its sale volume going up during the period by 15 percent.
CY13: The company recorded 20 percent increase in its topline during the first nine months of the year. Overall, the financial year 2013 was a unique year for the company as it recorded the highest profit after tax in its 152 year history of operations. The company recorded Rs 718 million in its bottomline which is a massive 37 percent increase year-on-year. The margins of the company also presented a pleasant picture. MUREB's gross margins increased by 200 bps and net profit margin rose by 300 bps.
The company was able to resolve its issue with Punjab Excise Department with regards to rectified spirit during FY13 that helped the liquor division to get its mojo back. The liquor division sold 5.003 million cases in FY13 compared to 4.271 million cases in FY12. The liquor-driven operating profit also increased by 24 percent in FY13. The investment Murree made during FY12 helped them a lot to achieve the target in liquor division.
The glass division also performed well during the period and company sold 20,138 metric ton of glass container in FY13 than 19,999 metric ton in FY12. The division also produced Rs 105 million in operating profits, a 15 percent growth over last financial year. The operating profit of Tops was also up during the period, and it contributed Rs 85 million in operating profit making up for 12 percent of the firm's total topline.During the period, Murree Brewery stayed on its marks regarding distribution and administrative expenses. However, other income saw an increase due to return on deposit and saving accounts.
FY14: One must wonder what is brewing at Murree Brewery. In FY14, the company again announced the gigantic profit of Rs 963 million, which is a 34 percent year-on-year growth in the company's bottomline. The firm's margins gave a mixed result. The gross margin increased by 100 bps in year -on-year comparison. The company faced the higher cost of doing business during the year that has significant effects on gross margins.
However, the net profit margin saw a growth of 200 bps. Besides the topline, the other income also played a major part in the increase of net profit margin. A major chunk of another income was the return Murree received on deposit and saving accounts. Murree showed a 19 percent growth in its sales from last year largely due to the performance of its liquor division that saw turnover increase by 23 percent year-on-year. The liquor also reflected an increase of Rs 134 million almost 17 percent increase in operating profit over the last financial year. However, the glass division did a wonderful job and contributed 30 percent to the revenue. Tops also performed well this year and pitch in 17 percent in net turnover, but higher distribution cost affected the firm's operating profit compared to last year.
Nevertheless, Murree has mentioned in the financial accounts that they have taken stay order on the capacity tax imposed in the finance bill 2013. Later on it was withdrawn by the government in the Finance Act, 2014. Similarly, the company again took a stay order on Gas Infrastructure Development Cess. However, the government passed the ordinance after losing the case in Supreme Court.
9MFY15: Murree Brewery boosted its profits by more than a third due to a strong performance by the liquor division in the nine-month period. The firm posted an after-tax profit of Rs 812 million or Rs 35 per share during the first nine months of the fiscal year 2015. It is up 35 percent compared to Rs 605 million or Rs 26 per share it earned in the corresponding period of the last fiscal year. The volumetric growth helped drive the company's profits.
Revenues also increased by 20 percent to Rs 4 billion in the period under review compared with Rs 3.3 billion it grossed in the corresponding period of FY14. The company saw its gross profit margin and net profit margins both increased by 200 basis points on year-on-year comparison, on account of the historic low prices of commodities and decreased in fuel prices.
The future seems very bright for Murree, sans some issues like the GIDC and beverage tax.. However, it is high time for the company to start lobbying again for exports.

==================================================
Murree Brewery Company LTD
==================================================
Rs (mn)                9MFY14   9MFY15         chg
==================================================
Turnover                3,373    4,048         20%
Cost of sales           2,167    2,504         16%
Gross profit            1,206    1,544         28%
Distribution cost         249      286         15%
Administrative expenses   148      177         20%
Other expenses             66       80         22%
Other operating income    127      194         53%
Net profit before tax     869    1,193         37%
Provision for taxation    264      381         44%
Net profit after tax      605      812         34%
Gross profit margin       36%       38%  Up200 bps
Net profit margin         18%       20%  Up200 bps
==================================================