Sri Lanka’s Lion Beer gives profit warning on blasts, taxes
ECONOMYNEXT – Sri Lanka’s Lion Beer Plc said it expected a downturn in tourism after Easter Sunday blasts to hit revenues and also warned on a change to tax policy.
In the December 2019 quarter profits were down 28 percent from a year earlier to 854.5 million rupees, with last year’s profits boosted by a 492 million rupees insurance receipt.
Revenues grew 18 percent to 11.9 billion rupees in the quarter, cost of sales grew 16 percent to 9.07 billion rupees and gross profits grew at a faster 26 percent to 2.89 billion rupees.
Full year revenues were up 44 percent to 42.8 billion rupees and gross profits were up 78 percent to 6.0 billion rupees.
Sri Lanka’s beer sales picked up after taxes were reduced to be based on alcohol content. In 2015 taxes were raised to benefit a hard alcohol manufacturer, critics said.
In the most recent budget, beer taxes were raised but taxes on extra special arrack, the cheapest hard alcohol was not raised.
"Once again it seems that policy consistency is being compromised, an ageâ€old challenge for the private sector in Sri Lanka," the firm told shareholders.
The Easter Sunday blasts on hotels and churches had led to a sharp downturn in tourism.
"Unfortunately, the economy has taken a few steps back because of these events and we are likely to see a significant drop in tourism in the months ahead," the firm said.
"Whilst this has the potential to challenge our results in the immediate future, management is taking all possible steps to continue the positive momentum achieved in the year just concluded."
Lion Beer chief Suresh Shah told EconomyNext that the firm was looking to cut costs and look at export markets. (Colombo/May18/2019)