ECONOMYNEXT - Profits at Sri Lanka's listed Lion Brewery grew 134 percent from a year earlier to 737.7 million rupees in the June 2018 quarter on growing demand from tourists for its beers and lower excise taxes, the company said.
Earnings were 9.22 rupees a share, interim accounts filed with the Colombo Stock Exchange showed.
"The continuing growth in the tourism sector has contributed to our performance dauring the year," the company said in a statement to shareholders.
"Importantly, we are seeing a greater influence from the tourist sector in the retail shops rather than from the larger hotel chains.
"This seems to confirm the available empirical evidence that more and more tourists are moving into accommodation in boutique hotels, hostels and the informal sector," the company said.
The share last traded at 620 rupees.
Gross profit in the quarter grew 190 percent to 2.7 billion rupees on revenue growth of 74 percent to 9.4 billion rupees and cost of sales increasing a slower 49 percent to 6.7 billion rupees.
Beer export to 19 countries saw volumes increasing 21 percent in the June quarter, but the company said it does not publish separate revenue number for domestic and foreign beer sales.
The government reversing an earlier decision to charge higher excise taxes on beer compared to hard liquor also helped domestic volumes recover as consumers switched back from hard liqour like the popular 'gal' and 'pol' arrack.
'Gal arracku' is referred to arrack distilled from sugar cane because of plantations that sprang up around the Gal Oya irrigation project in Ampara. 'Pol' is coconut.
"We are (also) seeing evidence of a reduction in the consumption of illicit alcohol. Thus, the Excise Duty reforms of November 2017 have resulted in both social and financial returns to all stakeholders," Lion Brewery said.
Net finance costs grew 3 percent to 309.5 million rupees.
Distribution costs rose 63 percent to 832.3 million rupees and administrative expenses increased 23 percent to 293.7 million rupees.