E-Malt.com News article: 4415

Canada: Sleeman Breweries Ltd., Canada's No. 3 beer producer, announced on March 10 it sold a lot more beer in the last three months of 2004 but profits stayed flat at C$3.9 million due to price cuts in the Ontario market. Sleeman said its fourth quarter diluted earnings per share were C$0.23 compared to C$0.24 in the prior year’s fourth quarter. Net revenue for the fourth quarter of 2004 increased 14% to C$55.6 million compared with C$48.7 million for the same period last year. This increase was the result of core volume growth of 1% and a favourable change in product mix. Premium brand volume increased by 18% with Unibroue volume contributing half of this growth in the quarter. "We sold the most beer in our history in the face of severe price discounting in the Ontario market in the last three months of the year," said company CEO John Sleeman in a statement.

Sleeman’s net income for 12 months 2004 rose 18% to C$14.4 million, or C$0.87 per share on a diluted basis, compared with C$12.3 million, or C$0.76 per share on a diluted basis in 2003. EBITDA was C$35.9 million compared with C$33.4 million in 2003, representing an 8% increase. Net revenue of C$213.4 million for the year was up 15% over net revenue of C$185.0 million in fiscal 2003. The increase resulted from 5% core volume growth, a 35% increase in Sapporo hectolitre sales and a mix shift to higher priced premium product sales in the period.

“We are pleased with our progress in achieving our strategic and financial goals this year. Our premium brands continue to generate increased sales and margins and we delivered strong growth in revenue, net income and core volume,” said John Sleeman, Chairman & CEO. “The Unibroue integration was completed in the quarter as planned. The integration has provided a positive impact on our operations and our relationships with our customers. We are confident that the integration of that business into our premium portfolio will generate increased revenue and positive returns.” Mr. Sleeman continued, “Operating conditions tested our mettle in the last half of 2004, but we proved our ability to meet new challenges, growing core volume by 1% and delivering record revenue in the fourth quarter. We sold the most beer in our history in the face of severe price discounting in the Ontario market in the last three months of the year.”

Sleeman’s management expects that the Canadian beer market will remain very competitive in 2005. Sleeman will continue to succeed by introducing innovative new products and executing distinctive sales and marketing programs. In addition, Sleeman will continue to lower its cost of production and distribution operations in 2005 as the Company realizes the benefits from recent capital expenditures and the successful integration of the Sleeman and Unibroue operations. By focusing on its costs, the Company is prepared for continued value price discounting by competitors for an extended period of time in 2005 in Ontario.

“Consistent with the strategy implemented in 2004, sales and marketing activities focused on the Company’s premium brands will be carried out throughout the full year in 2005. This strategy should allow the Company to generate sustained consumer interest in the Company’s brands. Executing this strategy will result in more evenly distributed sales and marketing expense charges over the four fiscal quarters in 2005. The brewing industry continues to consolidate, and Sleeman continues to look at acquisition opportunities, which meet strict operational, financial and strategic criteria. The Company has the financial and management capacity to make further acquisitions that meet these criteria.

The Company generated normalized earnings per share of C$0.90 in 2004. Assuming current market and production conditions and average weather conditions for the year, the Company expects that its 2005 earnings per share will increase by at least 10% over this normalized 2004 figure.

Sleeman Breweries Ltd. is the leading brewer and distributor of premium beer in Canada and the third largest brewing company nation-wide. The Company has supplemented its core Sleeman brands, which are available in every province, with a family of exceptional regional brands. These include Okanagan Spring and Shaftebury in British Columbia and Alberta, Upper Canada in Ontario, Unibroue in Québec and Maritime Beer in Atlantic Canada. Sleeman entered the rapidly growing value price category in 1999 by acquiring the Stroh portfolio of brands in Canada. The company markets and/or distributes world-class imported products such as Guinness, Grolsch, Samuel Adams, Scottish & Newcastle (including Bulmers Strongbow English Cider), Sapporo and Pilsner Urquell, and provides contract production for Japan’s Sapporo Breweries’ products. The Company’s products are also available in selected U.S., British and European markets.

Sleeman Breweries Ltd. is the largest premium brewery in Canada, producing and marketing several unique brands of beer. The Company operates breweries in Guelph, Ontario; Chambly, Québec; Calgary, Alberta; Dartmouth, Nova Scotia; Vernon, British Columbia ; and LaCrosse, Wisconsin. The Company’s reportable segments represent the aggregation of strategic business units that produce and sell beer in distinct geographic markets. They are managed separately because each business operates in different market environments in terms of regulatory regimes, customer preferences and sales and distribution channels.


12 March, 2005