COLOMBO (EconomyNext) – Profits at Sri Lanka’s Lion Brewery rose 38 percent from a year earlier to 556 million rupees in the December 2014 quarter despite tax hikes which were absorbed, as domestic production replaced higher cost imports, the company said.
The firm reported earnings of 6.95 rupees per share. In the nine months to December the firm reported earnings of 19.28 rupees. The stock closed at 612.00 down 22.90 rupees Monday.
Lion Brewery said revenues rose 26 percent to 8.5 billion rupees and costs rose at a slower 2 percent to 6.3 billion rupees, helping lift gross profit by a faster 45 percent to 2.2 billion rupees.
"The improvement in the profitability over the previous year is mainly a result of the Company ceasing the import of canned beer to meet market demand," the company told shareholders.
"Last year, the import of canned beer was necessitated to fill a void between production capacity and market demand and was done at a substantial expense to the Company.
"This void has now been addressed and since September 2013 the Company no longer imports canned beer."
New taxes were also slapped on alcohol producers in the January 29 revised budget in a bid to raise salaries of state workers.
The firm said on October 10, 2014 excise duties were raised and the firm raised retail prices. In a budget on October 25, the alcohol and tobacco was exempted from value added tax and excise duties were increased again.
The firm said it lost input credit of about 600 million rupees as a result.
"Prices were not adjusted to compensate for this cost increase since it was felt that two such increases in a space of two weeks would be counterproductive," the firm said.