Lion reports decline in earnings

beer bottlesNew Zealand’s largest brewer, Lion Beer, Spirits and Wine NZ, reported a 21 per cent decline in full-year earnings as the alcohol market adjusts to a rise in craft beers and people choosing to drink less.

In its recent financial statements, the company reports pretax earnings fell to $55.6 million in the 12 months ended September 30, from $71.2 million. Sales fell 5.2 per cent to $535 million. Lion says earnings rose 5 percent excluding one-time costs, a report by the NZ Herald stated.

Statistics New Zealand said the total volume of pure alcohol sold in the country fell 4.1 per cent in 2015. In February, Lion said sales volumes had fallen 4.4 per cent in New Zealand.

The company is currently targeting premium, craft beers, low-alcohol and non-alcoholic drinks to grow profit.

According to an ANZ Bank report about the industry that was published last year, beer sales in New Zealand had fallen 12 per cent since 2008, yet, off-premise craft beer sales had risen 42 per cent between 2014 and 2015.

In two years, sales of craft beer had risen to 13 per cent of the market from nine per cent while beer exports to Asia had doubled.

The company, which is owned by the Japanese brewer Kirin Holdings, is due to open a new Emerson’s brewery in Dunedin in July this year and says sales of the brand have risen 20 per cent.

As the industry changes, Lion has set aside more money to cover the cost of restructuring and termination benefits to staff made redundant. The company paid out $1.9 million over the year to September 30 and set aside another $2.8 million. Lion paid out $1.5 million in the year to September 30, 2014, and had set aside $3 million to cover future costs.

Lion Liquor Retail, the division that includes the retail chain Liquor King, posted a 3.8 per cent increase in sales to $82 million. However the cost of making those sales rose by 4.6 per cent, partly because of a rise in finance costs and other expenses. That meant the company recorded a loss before tax of $1.82 million.

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