Ayesha Mudassar

Murree Brewery Company Limited (MUREB) profit surged by 113% to Rs1,152 million in the first half (June-December) of the current fiscal year (1HFY24), up from Rs540 million in 1HFY23, reports WealthPK. The gross profit also rose by 71% to Rs2,656 million in 1HFY24. Similarly, the profit-before-tax experienced a massive increase of 142% during the period under review, reaching Rs1,850 million from Rs765 million 1HFY23.

Moreover, the net revenue posted a reasonable growth of 31% to clock in at Rs10,759 million. The impressive growth in sales can be attributed to increased consumer demand and the company's strategic marketing initiatives.

The earnings per share (EPS) for the first half of FY24 stood at Rs41.66, representing a 113% rise compared to the same period last year. The rising EPS suggests an increase in the company's earnings available to shareholders per share.

In addition, the company contributed a sum of Rs4,333 million to the government exchequer on account of duties and taxes during the six months ended December 31, 2023.

Pattern of shareholding

As of June 30, 2022, MUREB had a total of 27.6 million shares outstanding held by 1,268 shareholders. Associated companies, undertakings and related parties, with a stake of 34.1% shares, form the largest shareholding category of MUREB. This is followed by foreign companies, which account for 24.5% of shares of the company.

Directors, the chief executive officer, their spouses and minor children hold 21.5% shares, while the general public has 14.68% shares of MUREB. Insurance companies represent 3.64% of the company's outstanding share volume. The remaining shares are held by other categories of shareholders, each having less than 1% stake.

Performance from 2018-2023 at a glance

MUREB showed steady top-line growth except in 2020. Conversely, the bottom line only showed growth in 2021 and 2022. The gross profit margin of the company descended over the years while net profit margins declined until 2020, and posted a rebound in 2021, but then tumbled in the subsequent years. In 2019, MUREB's net sales posted a reasonable year-on-year (YoY) growth of 12% to clock in at Rs10,121 million. Pakistan-made Foreign Liquor (PMFL) and non-alcoholic beverages are the top contributors to the company's sales mix.

Moreover, the net profit slid by 6% YoY to clock in at Rs1,222 million with a net profit margin of 12% versus 14% in 2018. In 2020, the company's top line plunged by 11% YoY. All categories, excluding tetra-pack juices, bottled drinking water, and glass products, posted a decline in sales revenue. Due to curtailed production, the gross profit fell by 20%, with the gross profit margin dropping to 26% in 2020. The net profit plunged by 44% to clock in at Rs682 million, with net profit margin dropping to 8% in 2020.

In 2021, MUREB's top line posted sales growth of 30% on account of high exports. Robust sales and contained expenses increased the net profit by a stunning 88%, with the net profit margin climbing to 11%. MUREB's top line grew by another 30% in 2022, backed by local and export sales. Record high inflation, rupee depreciation, and high energy charges pushed the cost of sales up by 34% in 2022, culminating in a drop in gross profit margin to 23%. Furthermore, the imposition of super tax almost nullified the bottom line growth, which grew by only 1% to clock in at Rs1,294 million.

The year 2023 didn't prove to be encouraging for MUREB. Rupee depreciation, global market commodity super cycle, and high fuel and power charges drove the gross profit down by 1% YoY. Gross profit margin also dropped from 23% in 2022 to 19% this year. Moreover, the bottom line slumped by 2% YoY to clock in at Rs1,273 million, with net profit margin dropping to 7% against 8% in 2022.

The company and its operations

Murree Brewery Company was incorporated as a public limited firm in February 1861. The principal activity of the company is the manufacturing and sale of alcoholic beer, non-alcoholic beer, PMFL, aerated water, mineral water, food products as well as glass bottles and jars. The company presently operates three divisions, namely Liquor, Tops and Glass.

Future outlook

The coming months present unprecedented challenges and uncertainties with continued political instability, exchange rate volatility and high inflation. Given the unpredictable economic environment, the company's management remains alert in its endeavour to continue to bring the best possible value to its shareholders.

Credit: INP-WealthPk